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.