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Government seeks 100 percent sale of Air India
After much procrastination, the Indian government will allow a 100% stake purchase in flag carrier Air India.
It is the latest attempt to offload the loss making carrier after an initial attempt last year failed to attract a single bidder.
It is calling for expressions of interest and has set a deadline of March 17.
Although this time round it is offering more attractive terms having shifting much of its huge debt to a separate holding company, bidders will have to take on $3.26 billion debt.
Air India’s total debt is about $8 billion.
The deal is for the entire business of Air India, AI Express and its 50% stake in the ground handling joint venture AI-SATS.
This time round the government is not insisting on retaining a minority stake.
A successful bidder will have full operational control over the business.
However there is still doubt that a deal will happen due to the large debt pile a bidder would have to absorb, even if it is sold for a nominal amount.
The airline has too many inefficient business units and may only find interested bidders if it is carved up.
"One reason why the deal may not go through is that investors may find it difficult to gulp the entire piece at a go. A sale done in parts is more feasible," says Praveen Sahay, deputy vice president at Edelweiss Broking.
"We want Air India as a brand to continue to fly but we need to privatize it," said aviation minister Hardeep Puri.
There may also be strong opposition from worker’s unions which are fearful of huge job cuts if a new owner takes over.
The airline has 121 aircraft operating nearly 100 domestic and international destinations with about 14,000 permanent and contract employees.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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