Iranian flag carrier Iran Air will remain under the state’s control as the government has canceled its plans to divest itself of the airline. This decision was announced earlier this week, with the Transportation Ministry citing concerns that the company could face financial challenges moving forward.
Full government divestment canceled
According to PressTV.com, Iran’s Transportation Minister Mohammad Eslami made the announcement on March 31st, which will see the removal of Iran Air from a list of state-run companies available for sale to private owners. The airline’s precarious financial situation was cited as the reason for the move. “Iran Air is among our national assets … after gaining the approval of the government, we took it out of the privatization list,” Eslami said.
The minister explained that the cancelation was the outcome of government-level discussions regarding the potential risks of such a divestment. CH-Aviation notes that this includes the risk of insolvency that could take place a number of years after any shift to private ownership.
“This company was available for privatization for several years. However, the situation was not ripe for such divestment because what was taking pace in practice could have harmed the IranAir,” -Mohammad Eslami, Transportation Minister of Iran via PressTV
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Organizational change is still on the agenda
According to CH-Aviation, it was mentioned that the Ministry of Roads and Urban Development is planning to conduct an overhaul of the airline’s organizational structure. The goal of this overhaul is to make Iran Air “a major player in the global aviation industry.”
When questioned about the overhaul and finding increased efficiencies, the Transportation Minister responded:
“If legal, financial, and managerial structural reforms are not implemented, privatisation will destroy IranAir, so the government agreed that it leave the privatisation list, and we’ve taken the opportunity to make these changes.” -Mohammad Eslami, Transportation Minister via CH-Aviation
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Shifts in ownership around the world
While IranAir might remain a national, government-controlled airline, 2020 saw a number of airlines flirt with the idea of government ownership.
- Alitalia is probably the highest profile airline in recent times to shift from private ownership to being a state-run enterprise.
- The Kenyan government has slowly been working towards nationalizing Kenya Airways.
- In April of 2020, there was talk of both TAP Air Portugal and Brussels Airlines facing nationalization.
The airline industry is a broad mix of ownership models – ranging from public ownership via the stock market, to being fully private companies. Of course, many carriers around the world are either partially or fully supported by the government with higher profile examples including carriers in the Middle East and Ethiopian Airlines.
Do you think the Iranian government made the right move in calling off the sale? Let us know your thoughts in the comments.
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