The government has unveiled plans to sell up to 76 per cent stake in Air India and transfer the management control to private players, starting the ambitious strategic disinvestment process for the debt-laden national carrier. The Civil Aviation Ministry issued a detailed preliminary information memorandum on the stake sale, saying the proposed disinvestment would include profit-making Air India Express and joint venture AIATSL.
Starting off the disinvestment exercise, Expression of Interest (EoI) has been sought from different entities, including foreign airlines. While the government would retain 26 per cent stake in the national carrier, the winning bidder would be required to stay invested in the airline for at least three years. The last date of submission of EoI is May 14 and intimation to the qualified interest bidders would be made on May 28. Bidding can be done as a single player or as part of a consortium. Bidder should have a minimum net worth of £500 million and the requirement is subject to certain conditions depending on the class of entities.
The Ministry has said that each consortium member should have positive profit after tax in at least three of the immediately preceding five financial years from the EoI deadline. It said, “However, if the member of the consortium is a scheduled airline operator in India, the condition to meet positive profit after tax shall not apply to such member, provided shareholding of such member is restricted to maximum of 51 per cent of paid up equity share capital of the consortium. In case of a foreign airline, the requirement to meet positive profit after tax requirement shall remain applicable.” Bids by management and employees of companies participating directly or by forming a consortium would be considered subject to guidelines issued by the Department of Investment and Public Asset Management (DIPAM).
The memorandum stated that the four other subsidiaries of the airline, Air India Engineering Services Ltd (AIESL), Air India Air Transport Services Ltd (AIATSL), Hotel Corporation of India (HCI), and Airline Allied Services Ltd (AASL), would be sent off through demerger or any other appropriate mechanisms. “Air India has interests in other entities (Air India Engineering Services, Air India Air Transport Services, Airline Allied Services, and Hotel Corporation of India) which are in the process of being transferred to a separate SPV and will not be a part of the proposed transaction.”
