Centre receives multiple initial offers for Air India
Govt sweetened the deal earlier this year when it extended the bid deadline to Dec 14 and allowed suitors to decide the part of debt they wish to take on
NEW DELHI: The Indian government said on Twitter it has received multiple bids for its stake in state-run carrier Air India, the auction for which ended on Monday evening.
“Multiple expressions of interest have been received for strategic disinvestment of Air India. The transaction will now move to the second stage,” according to a tweet from the secretary, Department of Investment and Public Asset Management.
Tata Sons, India’s autos-tosteel conglomerate, is expected to have submitted an initial bid for the loss-making airline, sources aware of the matter told Reuters. A Tata spokesperson declined to comment.
A group of more than 200 Air India employees have also submitted an initial bid for the carrier in partnership with a private financier, Business Standard reported earlier on Monday.
Prime Minister Narendra Modi’s government in January renewed its push to sell its entire interest in the loss-making airline, which has been kept aloft by a bailout since 2012.
An effort to auction a majority stake almost two years ago drew no bids, forcing the government to ease terms. It has also extended the deadline multiple times this year due to Covid-19 and further eased the terms to attract bidders.
The airline industry around the world has been hammered by a slump in travel due to restrictions aimed at containing the novel coronavirus.
Tata already operates two airlines in India - full-service carrier Vistara, which is in partnership with Singapore Airlines, and budget airline AirAsia India along with Malaysia’s AirAsia Group.
A successful bidder would win control of Air India’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.
It would also get 100% of the low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports, the bid document showed.
Earlier in the day, a group of 219 Air India Ltd employees submitted a bid to purchase 51% of the loss-making state-owned carrier. The remaining 49% will be held by a financial partner, according to Meenakshi Malik, who is Air India’s commercial director. Each employee will have to contribute at least ₹100,000 ($1,360) toward the bid, she said.
The government sweetened the deal earlier this year when it extended the bid deadline to December 14 from October 30, saying potential suitors will be allowed to decide how much of the flag carrier’s debt they want to take on as part of the transaction. The rules before that required bidders to take over the carrier’s $3.3 billion of aircraft debt, deterring buyers.
“We always believed Air India can be a profitable set up,” said Malik. “The government has removed a huge part of the debt, so we thought who better than us? We know the airline inside out, we know where the problems are. We’re not bidding to win or lose, we’re doing it because we believe we can run the airline well.”
Air India has been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines Ltd, and has relied on taxpayer money to keep flying, with the bailouts adding to the pressure on strained government finances.
The state-run carrier’s entire debt totals more than $8 billion.