In a bid to pave the way for government funding of the fleet acquisition plans of Air-India and Indian Airlines, the civil aviation ministry has urged the Cabinet Committee on Divestment to put on hold the divestment of the two public-sector carriers.
A Cabinet note to this effect was sent to the CCD late last week before Civil Aviation Minister Shahnawaz Hussain left for the Hajj pilgrimage, official sources said in New Delhi.
The ministry's move comes in the wake of the government's intent to arrive at a final decision on funding the fleet acquisition plans of the two airlines.
Sources said the Cabinet Committee on Security could not have given the go-ahead to the funding for aircraft acquisition with the two carriers still being in the list of PSUs to be divested.
Otherwise, the stated government position was that the selected private party would have to invest in fleet acquisition, which would have further delayed the process.
The CCS is likely to take a final view on the issue soon after the note is circulated to the key ministries, including finance and divestment.
Now, with the civil aviation ministry writing to the CCD to remove the two carriers from this list, the government could decide to pump money into the two carriers, the sources said.
Indian Airlines has decided to acquire 43 aircraft and European consortium Airbus Industries is almost likely to bag the deal at a cost of over Rs 10,000 crore (Rs 100 billion).
Air-India has plans to buy 17 planes and is currently examining technical and financial bids from Airbus and Boeing, besides the engine manufacturers, to select the most-suited aircraft.
The shortlisted ones include Boeing-777s and Airbus-340s to meet its long-range requirement with over 250 seats.
The divestment of Air-India fell through about two years ago with the Tatas and Singapore Airlines walking out of the process. For Indian Airlines, two shortlisted bidders were disqualified from picking stake in the domestic carrier by the government.
Since then, the divestment process in the two airlines has been in the backburner as no international carrier has been either financially or otherwise interested, especially after the recession that hit the global aviation industry following 9/11.
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