Air India sale: Government offers 100% stake sale in national carrier
This is the second attempt to sell the debt-ridden airline.
The government on Monday said it wants to sell its entire stake in Air India, Reuters reported. This is a major shift from the government’s stance in 2018 when it wanted to divest only 76% stake in the national carrier. The proposed stake sale, however, had failed to take off then. This change will give complete operational freedom to the new owner.
A document inviting expressions of interest said India would sell a 100% stake in the carrier, its entire stake in low-cost international arm Air India Express, and its complete 50% share of ground handling subsidiary AISATS. The document, released on Monday, has March 17 as the deadline for submissions of initial expressions of interest. Qualified bidders are likely to be notified on March 31.
The document added that a bidder would have to agree to assume roughly $3.26 billion (Rs Rs 23,286 crore approximately) in debt, along with other liabilities. Last time, the bidders were expected to take over debt of Rs 24,576 crore and current liabilities of Rs 8,816 crore — a combine figure of Rs 33,392 crore.
The airline’s debt, which stood at Rs 55,000 crore at the end of March 2018, grew to Rs 58,351.93 crore at the end of March 2019. Currently, the combined actual debt of Air India and Air India Express stands at Rs 60,074 crore. The balance of nearly Rs 27,000 crore has been absorbed by the government, reported The Hindu.
In November, Finance Minister Nirmala Sitharaman had said that the airline was expected to be sold by March 2020. Sitharaman claimed there was a lot of interest in Air India.
The Nariman Point headquarters in Mumbai and the corporate headquarters in Delhi near Connaught Place, however, will not be part of this transaction and will remain with the government. Successful bidders will be allowed to use them during the transition period for a couple of years. “AI [Air India] is in possession of various articles of arts, paintings, objects and artefacts. These are not a part of the proposed transaction,” stated the preliminary information memorandum, according to The Times of India.
In March 2018, the government had planned to divest 76% stake in Air India, ignoring a parliamentary panel’s recommendation to give the debt-ridden airline five years to revive itself. The proposed stake sale, however, failed to take off as the government did not receive any expressions of interest from potential bidders by the end of the deadline.
On November 27, Civil Aviation Minister Hardeep Singh Puri told Parliament that the Centre will have to shut down the national carrier if it was not privatised. However, he added that a favourable deal would be negotiated for all employees.