Air India sell-off to begin with airline arm: Report

THE process of national carrier Air India’s sell-off is likely to begin with the airline arm first being put on the block, says a media report. Air India is to be split into four parts — AI-AI Express-AI SATS; ground handling unit; engineering units and Alliance Air — and be offered for sale individually.
“The bid documents for the main airline arm will be...
out in a couple of weeks. The document for AI’s other arms will come subsequently. That is our plan,” said a senior official. Being the most visible and complex aspect of this sale, authorities are keen to begin the process of divesting in the airline arm so that the transaction may be completed in the remaining term of this government. Air India’s debt, which could be around Rs 70,000 crore, will be spread over the four entities and an SPV that will remain with the government.
IndiGo has given a formal expression of interest (EoI) for the airline arm in terms of “international operations of AI and AI Express” or “alternatively all of the airline operations of AI and AI Express”. Tata Sons-Singapore Airlines (SIA) JV Vistara also has an open mind for AI “if it makes business sense”. SIA is reportedly very keen on AI.
Another foreign player has approached the government to buy 49 percent in Air India.
“The foreign company which has approached us is not a known airline and it is not known if it is behind a known airline. It wants 49 percent stake in AI’s airline arm as per Indian rules and we are not sure if it wants its name to be made public yet,” the report said quoting sources.
Other players like Jet are watching from the sidelines as they are waiting for the bid documents to know exactly what is for offer and for how much. Meanwhile, Qatar Airways — whose CEO Akbar Al Baker recently reaffirmed the plans to start an airline in India — is yet to begin the formal process to do so.
Qatar Airways has been keen to pick up a stake in IndiGo for years but the Indian low cost carrier has been “politely declining” the same. Now with AI being privatised, industry insiders there are chances of Qatar Airways tying up with some other Indian carrier to bid for the Maharaja. The airline has not commented on this issue so far.
The government hopes to decide on AI’s new owner by June-end and complete the “legal closing” of the transaction by December when the Maharaja’s assets are transferred to the winning bidder. The Maharaja is surviving on an equity infusion of Rs 30,231 crore approved in 2012 and which was to be given over a decade.
Earlier, the Parliamentary Standing Committee on Transport, Tourism and Culture concluded that the government should review its decision to privatise or disinvest Air India and explore the possibility of "an alternative to disinvestment of our national carrier which is our national pride".
Last year, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle nod for the strategic disinvestment of the airline.
Under a turnaround plan approved by the previous UPA regime, Air India is to receive up to Rs 30,231 crore from the government subject to meeting certain performance thresholds. The ten-year bailout package began from 2012.