India approves plan to sell stake in national airline

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Top officials said the governments decision to look at ways to privatise the airline was in line with its efforts in the past two years for a turnaround of Air India.

The committee will decide how to deal with Air India's massive 520 billion rupee ($8 billion) debt. The National Carrier survived for the bailout package of 30,000 Crores that has pumped in by the Government during UPA-II to save the Airlines.

Share price of Interglobe Aviation (Indigo) tumbled over 3% on Thursday after the aviation ministry confirmed that the company has shown interest in buying Air India.

Reflecting the kind of disruption the no-frills airline has inflicted in the domestic market, aviation think tank CAPA's latest report said IndiGo's unprecedented growth creates a strategic compulsion for others to expand.

Another employees union, Air Corporation Employees Union, is planning to seek an appointment with the Prime Minister's Office.

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Air India has 14% share in the domestic market where cutthroat competition from private airlines like Indigo and Spicejet is hurting its profitability.

The Tata Group, an Indian conglomerate that owned Air India before the carrier was nationalised almost 70 years ago, has also been touted as a possible purchaser.

'No one in their right mind would buy Air India.

Air India factbox Graphic shows revenues and losses since the Indian government merged profitable domestic Indian Airlines with loss-making global arm, Air India, in 2007. "The civil aviation ministry is exploring all possibilities", Jaitley had said. Of the total debt, Rs 20,000-25,000 crore is related to aircraft valuation.

This follows a three-month deleberations by various ministries after it was decided by the Union Civil Aviation ministry that stake sale of Air India was the best step forward. At the same time, Air India is witnessing growth at about 17 % a year on worldwide routes. Tata Group, after several decades, re-engaged with the Indian aviation market when it launched an airline, Vistara, in conjunction with Singapore Airlines as well as got a stake in Air Asia.

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