Air India’s domestic, international operations to be sold together

Wednesday 06th December 2017 06:33 EST
 
 

Union Minister of State for Aviation, Jayant Sinha has said the government won't separately sell the international and domestic operations of Air India, adding that interested parties will have to bid them together. The bids will be sought for AI's domestic and international operations as an “integrated airline.” All parties interested will be allowed to bid separately for subsidiaries of AI.

“We have so far received formal expression of interest (EoI) from Indigo for AI's airline arm. For the ground-handling and MRO subsidiaries, a few others have done the same,” Sinha said. Air India has five subsidiaries; low-cost airline AI Express, ground-handling arm AI Air Transport Service, maintenance, repair, and overhaul arm AI Engineering Services, regional operator Alliance Air, and Hotel Corporation of India. “The divestment of AI is time-bound process and we expect to award the bids in six-to-eight months. We are going to provide flexibility in the bidding process. Bidders can bid for as many subsidiaries as they want. The transaction adviser will call for multiple bids. It will be a market-driven process,” Sinha said.

Several leading players including the Tatas, have expressed interest in AI's airline operations. IndiGo is interested in the “international airline operations of AI and AI Express. Alternatively, it is equally interested in acquiring all of the airline operations of AI and AI Express.” A group of ministers head by Finance Minister Arun Jaitley will decide on aspects like eligibility of the bidders, and whether foreign airlines in a joint venture with Indian or foreign partners should be allowed to buy the Maharaja.

The panel will decide how to make AI which is in a debt of £5.2 billion, attractive enough for bidders. A top government source said that besides IndiGo and Tata Group, other Indian carriers, especially Jet Airways, may also join the fray. The source said, “The economics of the game will change completely for whichever airline gets Air India. With its 14 per cent domestic and 17-18 per cent international market share, getting AI will be a paradigm shift for the successful bidder.” The government source said, “The ultimate decision on privatising AI will be of PM Modi alone. The process began with his go-ahead only. The government is going to sell a clean AI to prospective bidders by putting all the tricky aspects like real estate in an SPV. We have devised a mode where the new owner will get a clean airline free of most of its past baggage.”


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