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Air-India privatisation on track: Shourie

The suspension of the head of state-run Air-India is unlikely to affect the airline's privatisation and the government hopes to complete the process by year-end, the divestment minister said on Saturday.

"The civil aviation minister has said it doesn't affect the process, it (the privatisation process) is going ahead. We must work with that confidence," Arun Shourie said in an interview.

The Indian government on Wednesday suspended the flagship airline's managing director, Michael Mascrenhas on allegations that he had misused his position by giving undue favours to a ticketing agent.

Domestic media reports have quoted Mascrenhas as denying the allegations. The civil aviation ministry has referred the matter to the federal investigating agency, the Central Bureau of Investigation.

The Air-India Employees' Guild, the largest union in the airline representing 12,000 of its 17,800 staff has also planned protests supporting Mascrenhas.

But Shourie warned that such incidents would "certainly unnerve potential bidders" and prompt them to seek reassurances from the central government in the shareholders agreement.

"Of course all turbulence in an enterprise and some civil war conditions are naturally going to unnerve potential bidders whether it is in Air-India or in any other enterprise," Shourie, said.

The government is selling a 40-per cent stake in Air-India and has received two bids, one from Singapore Airlines in tandem with India's Tata group, and the other from the UK-based billionaire Hinduja brothers.

Both groups have finished performing due diligence on the airline and are expected to proceed on the shareholders' agreement after which they will be asked to submit their price bids.

Asked whether he expects the sale of a stake in Air-India to be completed before the end of the year, Shourie who is spearheading India's privatisation programme said: "I think so. It is proceeding well."

The Indian government, whose privatisation programme has been dogged by delays, has said it hopes to raise Rs 120 billion through sale of stakes in at least 27 state-run firms in the current financial year.

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