India’s cabinet approved on Wednesday plans to sell a stake in state-run Air India as the debt-saddled carrier struggles to compete with low-cost rivals in one of the world's fastest-growing airline markets.
“A civil aviation ministry proposal was received by the cabinet which was given an in principle approval for the disinvestment of Air India,” finance minister Arun Jaitley said after the meeting.
The cabinet also set up a separate group, headed by Jaitley, to decide how to move forward with the sale, including the amount of divestment and other matters related to its assets and debt.
Once the country’s monopoly airline, Air India lost market share to new private players, especially low-cost carriers.
Hit by delayed and cancelled flights and a generally poor service record the flagship carrier began accumulating debts as passengers flocked to an ever-growing market of competitors.
The carrier received a $5.8 billion bailout package from the government in 2012.
Proposals to privatize the airline have been floated in the past but stalled.