Air India Privatisation Begins

By Ankur Deo | January 28, 2020

Air India Privatisation Begins, by Travel Radar Correspondent Ankur Deo

Today, on January 28, 2020, the Indian government has formally began the privatisation process for the beleaguered national carrier: Air India. This is the government’s second attempt to divest its stake in Air India. In the first attempt in 2018, it had put up 76 percent of Air India up for sale, however, it attracted little to none interest from any buyer. Learning from this experience, the government has now offered to sell its full stake in the carrier in addition to reduction of a huge debt of nearly Rs.42000 cr (approx. $7b). Thereby, the new owner of Air India will now be taking on a debt of Rs 23286 crore (approx. $3.5b) as opposed to the earlier Rs 62000 crore (approx $10.5b) debt.

Quite some entities have reported their interest in buying state in the carrier. Indian carrier Vistara Airways, a joint venture between Tata Sons and Singapore Airlines has stated that it is studying the deal. An official from Vistara said:

‘The offer does not seem worth rejecting’

Other realtors like the Hinduja Group, IndiGo Airlines and Etihad Airways have also shown interest in participating for the bid. The last date to submit the EoI is March 17, and the government will intimate the qualified bidders by March 31, 2020.

The government will completely exit Air India (AI), including in units Air India Express (AIXL) and Air India SATS (AISATS). The expression of interest (EoI) document released on January 27, 2020 states:

The Government of India has given an ‘in-principle’ approval for the strategic disinvestment of Air India by way of transfer of management control and sale of 100 percent equity share capital of AI held by government, which will include AI’s shareholding interest of 100 percent in AIXL and 50 percent in AISATS. As per the EoI, any interested bidder, sole or consortium, needs to have a total net worth of at least Rs.3500 cr (approx. $500m).

A successful sale of Air India is imperative for the government to meet its disinvestment target. Moreover, the airline, which is dependent on government largesse to run its operations, needs a new owner to keep flying, after the government has limited the amount to be infused in the airline. It has been made clear that, in case the airline fails to find a new buyer, it might as well have to shut down.

We are closely following how the AI saga continues, stay tuned for more!

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