Govt plans to finish sale of Air India by December
DISINVESTMENT Govt will allow private bidder to pick up 51% stake in airline NEW DELHI:
The government will allow a private bidder to pick up 51% or more stake in Air India Ltd and plans to complete the sale of the airline by December, minister of state for aviation Jayant Sinha said on Friday
A group of ministers led by finance minister Arun Jaitley will decide on whether the government will retain a stake and its extent, but management control will be handed over to the new owner, he told reporters.
The carrier will be put up for sale as “four different entities” for which interested parties will be allowed to bid separately, Sinha said, adding that the information memorandum for the proposed disinvestment would be issued in the next few weeks.
The first company will include Air India’s domestic and international operations besides Air India Express and Air India SATS.
The second will comprise its engineering arm, the third ground handling while the fourth will be Alliance Air.
The memorandum will lay out details about various aspects, including what will be available for bidding, assets and how much stake the government will own, he said. It will also stipulate whether or not the new player will have to retain the Air India brand name among other things.
“We expect to have a winning bidder by the end of June and the legal closing of this transaction by end of this calendar year,” Sinha said, adding that so far two formal expressions of interest have been received by his ministry.
Assets like Air India’s Nariman Point headquarters in Mumbai and hotels will be carved out and placed in a separate unit under government supervision. This unit will also hold the unsustainable debt -- the quantum of which is to be decided.
Some of the other debt will be divided between the first four companies to be sold. Sinha said valuation of the company will “most likely” be done on an ongoing entity basis and government-appointed consultants will set a floor price.
IndiGo, run by InterGlobe Aviation Ltd, has shown interest in Air India’s international operations. The Tata group has also shown interest in Air India pending conditions of sale. Another international player has written to the ministry showing interest but the name has been kept confidential.
Turkey’s Celebi Aviation Holding, Bird Group, Menzies Aviation Plc and Livewel Aviation Services Pvt. Ltd have shown interest in the national carrier’s subsidiaries.
Air India has a fleet of about 140 planes, with a 17% share of traffic on routes linking India to international destinations and a 13% share of the domestic market.
The national carrier, which is part of the world’s biggest airline grouping Star Alliance, also has prime slots at airports across the world along with land banks and buildings among its assets.