| Civil aviation minister Praful Patel with Saroj Poddar, senior vice-president of Ficci, in Calcutta on Saturday. Picture by Kishor Roy Chowdhury
Calcutta, June 18: The Centre has decided to complete the disinvestment of two national carriers, Indian Airlines and Air-India, during the current fiscal, civil aviation minister Praful Patel said in Calcutta today.
The government is now in the process of appointing advisers to work out the valuations of these two companies before putting them up for sale.
Patel said the public sector nature of them would, however, be maintained. 'We are not looking beyond more than 20 per cent share dilution in either of these entities,' he said during an interactive session organised by Ficci.
The two national carriers have placed orders for large number of new aircraft to expand their fleet. To fund this, they will require large capital infusion.
Air-India and Indian Airlines will spend about $7-8 billion for the acquisition of those aircraft.
The equity base of Indian Airlines and Air-India are Rs 107 crore and Rs 153 crore, respectively.
Patel, however, did not specify how the fund would be raised by the airlines. 'Once their valuation is done, we shall be in a position to say how much will be required to raise through disinvestment,' he added.
The government's proposal will have to be approved by the cabinet. The Left parties will also have to be convinced about the disinvestment.
Patel said the government was in no position to pump in fresh equity capital, so the need for partial disinvestment was critical.
Big ticket investment
Indian aviation sector is going to draw $25 billion investment in the next five years.
Patel said this would keep the growth momentum of the sector going, at least for the next five years, at a compounded annual rate of 25 per cent.
Airports in four metros and 30 non-metro cities will be upgraded at a cost of $10 billion while the two state-run carriers, Air-India and Indian Airlines, will buy new aircraft for $7-8 billion. Domestic private operators will also pump in $8-10 billion for their fleet expansion.
Patel said the opening up of the aviation sector and growth of private airlines had not only led to a high growth rate coupled with growing competition in the sector, people were also benefited, as connectivity had significantly improved and airfare had come down drastically.