AI stake sale plan crash-lands, govt to rethink strategy

In a major setback to the Air India disinvestment process, the government said no initial bids were received for the proposed strategic stake sale of the debt-laden airlines by the deadline on Thursday.

The deadline for submission of expression of interest (EoI) ended on Thursday.

"As informed by the transaction adviser, no response has been received for the

EoI floated for the strategic disinvestment of Air India," the Civil Aviation Ministry said in a tweet.

"Further course of action will be decided appropriately," it added.

EY is the transaction adviser for the process.

"We were looking forward for better participation," Civil Aviation Secretary R N Choubey said.

The alternative mechanism headed by the finance minister would decide on the future course of action on Air India disinvestment, Choubey said even as he emphasised that the government would not like the airline to lose the market share.

The government will ensure that the airline does not face "any operational difficulties following the latest developments".

The government has proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players, as per the preliminary information memorandum.

“Relative to what we are seeing this year ... uncertainty in the financial markets, aggravated distress among banks and rising interest rates and oil prices, it does not seem like a very supportive time for people to come and buy such an asset,” Renu Kohli, a Delhibased independent economist, said, adding that Air India needed large investment. The transaction would involve Air India, its low cost arm Air India Express and Air India SATS Airport Services. The latter is an equal joint venture between the national carrier and Singaporebased SATS.

Earlier this month, the government had extended the EoI submission deadline to May 31 from the previous date of May 14. The qualified interested bidders were to be intimated on June 15.

While a buyer would have got management control and gained access to more than 2,500 international slots and over 3,700 domestic slots, it would also have been required to take on Air India’s 27,000 employees, 40 per cent of whom are permanent staff. As per the earlier schedule, the details of qualified interested bidders would have been known on May 28.

The alternative mechanism headed by the finance minister would decide on the future course of action on Air India disinvestment