Even though the Union Cabinet has allowed foreign airlines to pick up 49 per cent stake in Air India, international players are likely to stay away unless the government agrees to hand over management control of the airline to them.

“Just as the government decided to allow Maruti Suzuki to run the operations without any interference, it should do the same with Air India as well if it wants to attract foreign airlines to pick up stake in the airline,” Capt GR Gopinath, the CEO and founder of Air Deccan told BusinessLine .

Aviation analyst company CAPA said it expects significant interest from foreign airlines though the offer and conditions attached will determine the level of participation in the bids.

“Executing this complex transaction very effectively and within timelines and ring-fencing from potential disruption, including political, will be critical,” CAPA’s CEO for India and the Middle East, Kapil Kaul, said.

Gopinath said he expected the total valuation of Air India to be around $10 billion (without the land), of which, around $5 billion will go to the government’s kitty if any airline chooses to pick up 49 per cent stake.

“If the Centre acts with prudence and transparency and goes for a transparent tender process, it can actually get a far better valuation,” he pointed out.

Hailing the decision of the government, the pioneer of low-cost airlines in India, Gopinath said that it was a positive step but wanted the Centre to slowly withdraw from the state-owned airline.

“Air India should be allowed to be listed at the stock exchanges and have a large public holding. But it should not allow any individual business house to hold a major stake.”

The government release said that substantial ownership and effective control of Air India shall continue to be vested in an Indian national with the divestment expected to take place in another three to six months.

With the latest decision, the government has placed Air India on par with private airlines where 49 per cent equity from foreign airlines are allowed.

After the government announced that it will privatise Air India, only Interglobe Aviation which runs IndiGo Airlines has expressed interest in picking up a stake in the national carrier.

The airline carries a debt of ₹52,000 crore on its books with losses amounting to ₹4,311 crore during 2015-16, though lower than the ₹6,280-crore loss in the previous year.

Gopinath said that the management of Air India should be allowed to retain employees it wants and let go the rest with a golden handshake from the government.

He said that Air India has some very good assets and that it should be utilised well. “The airline has huge assets, grandfather rights and with a zero debt company with management control thrown in, any foreign airline would be keen to pick up equity,” he said.

Agreeing with Gopinath, CAPA’s Kaul said that the new investors should have reasonable flexibility to take commercial decisions on employee numbers and productivity over time, particularly for non-core roles.

“The unions and employees of AI must strongly support this divestment as CAPA sees more jobs and growth in Air India,” Kaul said.

CAPA, in an earlier note, had said that the government should clean up its balance sheet and Air India Express and special business units such as Air India Engineering should be sold separately.