As part of strategic disinvestment of Air India (AI), the Government on Wednesday said that it has invited bids for the sale of 76 per cent stake in Air India, which has 100 per cent stake in low-cost international subsidiary Air India Express. Along with AI, proposed bids includes sale of the national carrier’s 50 per cent stake in Air India SATS Airport Services (AISATS), a ground handling subsidiary between Air India and Singapore Airport Terminal Services, where AI owns 50 per cent stake in AISATS.
“The Government of India has given an ‘in-principle’ approval for the strategic disinvestment of AI by way of the transfer of management control and sale of 76 per cent equity share capital of AI held by the Government, which will include AI’s shareholding interest in the AIXl and AISATS,” said a memorandum released by the Government.
The Civil Aviation Ministry has also issued advertisements for Expression of Interest (EoI) of loss-making carrier and its two subsidiaries from interested parties by 5 pm on May 14, saying that the companies or consortium bidding for the national carrier will have to have a net worth of Rs 5,000 crore.
As far as the proposed strategic disinvestment process is concerned, Ernst & Young India has been appointed as key transaction adviser to take it forward, according to a Ministry official. The memorandum further said that Air India management or employees can also participate in the bidding process either directly, or by way of forming a consortium.
In a move to facilitate participation by Indian carriers, the Government has also allowed carriers with zero or negative net worth to participate provided they form a consortium with other partners, together adding up to the stipulated threshold. An airline with negative net worth can also partner a private equity investor to bid for Air India.
In June 2017, the Cabinet Committee on Economic Affairs (CCEA) gave in-principle nod to the strategic disinvestment of the airline, which has a debt burden of over Rs 50,000 crore.
Subsequent to the decision, the Air India Specific Alternative Mechanism (AISAM), headed by Finance Minister Arun Jaitley, was set up to decide on specific issues. The national carrier is staying on taxpayers’ money under the turnaround plan approved by the previous UPA Government in 2012.