Air India privatization on track

Air India privatization on track

NEW DELHI (Reuters): The suspension of the head of state-run
Air India is unlikely to affect the airline's privatization and
the government hopes to complete the process by year-end, the
disinvestment minister said on Saturday.

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

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

Domestic media reports have quoted Mascarenhas 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 Mascarenhas.

But Shourie warned that such incidents would "certainly
unnerve potential bidders" and prompt them to seek reassurances
from the federal 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-percent 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 U.K.-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.