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Foreign airlines keen to join Air-India as strategic allies

Air-India said on Thursday that a number of foreign airlines had shown interest in taking an equity stake and joining it as a strategic partner.

"A whole lot of airlines have shown interest," Jitendra Bhargava, the airline's chief spokesman, said.

He said the talks had only been at an informal level as no official procedure had yet been laid for buying a stake.

Bhargava said it would be premature to discuss the names of airlines at this stage which might be possible contenders.

The airline is likely to soon advertise for a global advisor who will help offload a 40 per cent stake to strategic investors.

The appointment of the advisor is likely to be made in three to four weeks, according to an airline official.

The Indian cabinet last week approved the decision to sell a 40 per cent stake in the state-owned airline, allowing up to 26 per cent to be sold to a foreign partner and 14 per cent to an Indian firm.

A further stake of 20 per cent is to be sold to financial institutions, retail investors and the airline's employees.

Air-India is the country's main international airline and has a fleet of 26 aircraft. The airline has been weighed down by losses of about Rs 10 billion and a huge workforce of about 18,000 employees.

Its employees to aircraft ratio of about 770 to one is one of the highest in the world making staff a substantial portion of its costs.

The airline has been trimming its wage burden through voluntary retirement schemes and lowering the retirement age of employees.

The Indian government has also recently initiated a privatisation of state-run Indian Airlines, which unlike Air-India operates largely on domestic air routes.

The steps to privatise the state-run airlines are part of an economic reform programme of the Indian government, a cornerstone of which is to privatise state-owned firms, many of which are loss-making.