Centre puts entire stake of Air India on the block

PLAN Govt invites initial expressions of interest, sets Mar 17 deadline for submissions

NEW DELHI: The government on Monday announced a plan to sell its entire stake in Air India, renewing its attempt to sell the state-owned airline after a similar move in 2018 failed to attract any bidder.

A document released by the government on Monday invited initial expressions of interest (EOI) in the airline and set March 17 as the deadline for the submissions. The Air India Specific Alternative Mechanism (AISAM), headed by Union home minister Amit Shah, approved the release of the preliminary information memorandum (PIM) for inviting EOI for the disinvestment move.

Civil aviation minister Hardeep Singh Puri said the airline was a “great asset” and its position was “fragile” due to heavy debt. He said Air India, as a brand, will continue to fly but it needs to be privatised.

“Due to its accumulated debt of about ₹60,000 crore, its financial position is in a very fragile condition and Air India is currently under a debt trap. Any private investor can turn it around and make Air India a profitable venture by bringing operational as well as financial efficiencies. The government has limited financial resources whereas the private investor can bring the required capital to make it turnaround. We hope and wish that Air India remains a vibrant airline and fly forever,” Puri said.

Monday’s announcement only marks the first of a multi-stage process. The government has given time till February 11 for the submission of written queries on PIM and the share purchase agreement (SPA) while the last date for submission of the expression of interest is March 17. It will announce the qualified bidders on March 31 following which the Request for Proposal (RFP) will be issued. The government has not yet announced the date for the RFP stage.

he move is also a politically contentious one. The Congress criticised the Centre over the move. “The sale of Air India has been going on for the last six years since 2014 when this government assumed office. A special group of ministers (GOM) was formed to look into it. Five ministers deliberated on it. If the government seriously wants to sell Air India, they should look for a real investor and have to go for a real strategic sale. The government has been misleading on the issue,” Congress spokesperson Supriya Shrinate said.

CPI general secretary D Raja blamed the government’s “bad policies” and maintained that the national carrier has the potential to emerge as a powerhouse in the aviation sector.

Experts also said the timing of the Centre’s move amid an economic slowdown could pose a

challenge.

“While divestment is a positive step, it has to be when you have a strong platform, not with a wobbly economic base. After the first failed attempt, it makes sense for the government to divest and find a company that can help make the Maharaja stronger... And this should be done especially when we have a positive economic climate. At the moment, the investment sentiment with India is not conducive… There are several external risk factors also in aviation such as oil prices, the Iranian crisis and the corona virus outbreak, etc.,” said Mark Martin, founder and CEO of Martin Consulting, an aviation consultancy.