India’s biggest airline IndiGo has pulled out of the running to buy national carrier Air India.
It delivers a blow to the Indian government’s bid to privatise the debt-ridden carrier as IndiGo is the only domestic entity which has publicly expressed its interest in purchasing it.
More importantly, IndiGo was the only Indian airline with the financial clout to buy a controlling 76% stake.
IndiGo parent InterGlobe Aviation has baulked at the government’s instistence that a successful bidder adsorbs two-third of Air India’s $7.8 billion debt along with a 50% stake in subsidiary Air India SATS Airport Services.
In a stock exchange filing IndiGo said it was still interested but only in Air India’s international operations and Air India Express low cost unit.
However this is not an option under the government’s proposal.
"We do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations," said Aditya Ghosh, president of IndiGo.
"From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express. However, that option is not available under the government’s current divestiture plans."
India’s civil aviation ministry has set a deadline of 5pm on May 14 for all expressions of interest.
