The government may sell up to 10 to 15% stake in Air India through an initial public offering in the second half of 2008, civil aviation minister Praful Patel told after announcing the country’s first civil aviation airshow India Aviation 2008. The show will be held in Hyderabad in October this year.

The government was keen to list Air India and raise funds for expansion of the company, so we may consider issuing an IPO in the second half of this year, he added.  

The proposed IPO is a part of the streamlining process that the Public Sector Unit is going through after the government merged two of its airlines - Air India and Indian Airlines - into NACIL. The merger is expected to be completed by the end of fiscal 2009. Employees’ stock option will also be considered during the dilution of equity.

Merchant bankers said that the government was likely to raise between Rs 2,500 crore and Rs 4,000 crore through the planned public issue. Air India has already selected DSP Merrill Lynch Ltd to advise it on its proposed issue.