Air India stake sale plan shelved, alternatives being worked on: government

India has shelved a plan to sell a 76% stake in state-owned carrier Air India due to lack of interest from bidders, a government official said Wednesday, marking the latest setback in its ambitious efforts to rescue the ailing airline. Air India is now reviewing its funding needs and weighing ways to remain competitive, Junior Civil Aviation Minister Jayant Sinha said, adding the government is still committed to privatising the airline. The decision to pull the plug on the plan came after India last month failed to attract buyers for the government’s stake in the debt-laden carrier. “We ran a disinvestment process where we made it very clear what type of bid we were interested in receiving. Nobody expressed any interest ... that process right now is over so we have to move forward and consider other alternatives,” he said. The government will continue to support the loss-making airline’s financial requirements while it works on alternatives, Sinha said, without giving a specific timeline for a new plan. While the government says it has been forced to review the plan also because of high oil prices, a weaker rupee and rising interest rates, potential bidders found some of the stake sale terms too onerous, making it a non-starter. Analysts say while a new plan is being worked on, the government should consider selling some of Air India’s non-core assets to fund its working capital needs.<br/>