The Central Government will be divesting its entire stake in Air India Ltd and its no-frill subsidiary Air India Express.
"Air India Specific Alternative Mechanism (AISAM) has approved the 100 percent sale of Government of India's stake in Air India, along with Air India Express, and government's stake in AISATS for the re-initiated strategic divestment of Air India," said civil aviation minister Hardeep Singh Puri to the Rajya Sabha on Wednesday.
The decision comes a year after the government failed to attract bids for a partial stake sale in the cash-strapped carrier.
The government owns 100 percent stake in Air India, and its subsidiary Air India Express. AISATS is a joint venture partnership between Air India and Singapore Airport Terminal Services (SATS) Limited, for ground and cargo handling services.
Puri said the government's failure to find bidders for the national carrier in its previous attempts at divestment was partially due to its decision to retain a 24 percent stake in the airline.
Air India has been functioning on a rescue package approved as a part of its Turn Around Plan (TAP) in 2012 and the government has infused over Rs 29,000 crore into the airline since. The stake sale which will also involve selling about 128 planes, will help the government exit a loss-making business.