IA on way to privatisation

New Delhi, March 17: State-run Indian Airlines is gearing up for privatisation with the help of a global adviser, Managing Director Anil B...

New Delhi, March 17: State-run Indian Airlines is gearing up for privatisation with the help of a global adviser, Managing Director Anil Baijal said on Friday.

"We have received bids from eight consultants. We are now going to invite them to make the presentations," Baijal said. In January, the Union Cabinet announced its decision to sell 51 per cent of the Government’s equity in the airline, of which 26 per cent will be sold to a strategic partner and the rest to employees, financial institutions and the public.

The selection of

a global adviser is likely to be over in one or two months, after which the airline will swiftly move to offload 51 per cent of the Government’s stake.

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An Indian Airlines spokesman said shortlisted firms include Merril Lynch, KPMG, Morgan Stanley, ANZ Grindlays and HSBC.

Indian Airlines, 100 per cent owned by the Government, is the country’s largest domestic airline, with a fleet of 56 aircraft. It is facing competition from private airlines that entered India under a nine-year-old economic reform programme.

The airline has 22-24 old aircraft — Boeing 737-200s and Airbus 300s — which will have to be retired soon because of mounting maintenance costs.

Baijal told Reuters the process for acquiring new aircraft was going on simultaneously with the airline’s privatisation. "Bids have been opened … The evaluation process is expected to take about three months."

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The airline wants to buy 150-200 seater aircraft within the Boeing and Airbus families. Depending on the model selected, it will add 30-40 new aircraft in its fleet.

Baijal said the airline expected to make marginal profits in 1999/2000 (April-March), although a rise in aviation fuel price had affected costs.

Indian Airlines turned the corner with modest net profits in 1997/98, after eight years of losses.