Domestic carrier IndiGo on Thursday withdrew from the race to acquire state-run Air India, saying that the terms set by the government were not suitable for it, Reuters reported.

On March 28, the Centre announced its plans to sell a majority stake in the debt-ridden national carrier. It invited bids to divest 76% stake in the airline through transfer of management, control and sale of equity share capital.

Interglobe Aviation, which operates IndiGo, had then publicly announced its interest to acquire the operations.

Minister of State for Civil Aviation Jayant Sinha had earlier explained that the company will be put up for sale as four different entities. The national carrier, its low-cost arm Air India Express and subsidiary AISATS will be one entity while Alliance Air – its regional arm – will be another. Air India Air Transport Services Ltd and Air India Engineering Services Ltd will be sold separately. Bidders can attempt to buy the four entities separately, or in any combination.

However, Aditya Ghosh, the airline’s president, has now said that his company will not be able to successfully turn around all of Air India’s airline operations. “From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express,” IndiGo said in a statement. “However, that option is not available under the government’s current divestiture plans for Air India.”

“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, the airline’s president, in the statement.

The Tata Group, Turkey’s Celebi Aviation Holdings and Singapore Airlines had also expressed a desire to purchase stake in Air India.

Debt history

Air India has not been earning profits since it was merged with state-owned domestic operator Indian Airlines in 2007. The company made an operating profit of Rs 298 crore in the year through March 2017 but still posted a net loss of Rs 5,765.16 crore.

The buyer has to take on Rs 33,390 crore of the national carrier’s total debt of Rs 48,700 crore. The government decided to divest its stake in Air India, ignoring a parliamentary panel’s recommendation to give the debt-ridden airline five years to revive itself.