(FE)
After a failed attempt in 2018, the government on Monday invited bids for privatising state-owned carrier Air India, a second effort in less than two years for stake sale in the debt-laden airline. Learning its lesson from the 2018 failure, the preliminary information memorandum states that 100% stake will be offloaded unlike 76% offered in the previous attempt. However, the new owners would be required to continue to use the “Air India” brand name and this cannot be changed.
The government has also retained a provision that substantial ownership and effective control of the airline must remain with an Indian entity. Besides AI, the government is also offloading its 100% stake in its low-cost subsidiary, Air India Express (AIXL), and 50% of AISATS, which provides cargo and ground handling services at major Indian airports. The last date for submission of EoI is March 17, while qualified bidders would be intimated by March 31.
Apart from reducing the debt of the loss-making airline, the government has made a number of changes in the eligibility criteria for prospective bidders in its attempt to sweeten the deal. For instance, the debt of AI and its low-cost subsidiary has been reduced to around Rs 23,286 crore from Rs 60,000 crore. This way the debt left with the company are only on account of aircraft purchase, which are against government guarantees. However, once the sale process to a private entity is over, these guarantees would go.
