Govt to divest 76 PC in AI, invites EoI

30 March, 2018, 00:26 | Author: Tina Rodriquez
  • Government wants to sell 76% stake in loss-making Air India transfer management control

The successful bidder would need to retain its stake in Air India and management control of the airline for at least three years, according to the government document.

The process is being monitored by Air India-Specific Alternative Mechanism headed by Finance Minister Arun Jaitley.

The Ministry of Civil Aviation has sought Expression of Interest (EoI) for the stake sale in the loss-making carrier and two of its subsidiaries.

The airline is under a massive debt burden of over Rs. 50,000 crore.

Modi's cabinet gave the go-ahead past year to sell the loss-making flagship airline after successive governments spent billions of dollars to keep it solvent. With its current domestic market share at just over 13 per cent, the government simply has no reason to stay invested in this so-called national carrier.

Even as the Air India has begun its thrice a week service to Tel Aviv in Israel flying over Saudi airspace, the national carrier El Al airline announced that it has approached Supreme Court terming it the deal to be unfair.

An open comparative bidding process will determine the new buyer and the disinvestment process is expected to be completed by December 2018.

Air India was founded in the 1930s and is known to generations of Indians for its Maharajah mascot.

Among other conditions, the selected bidder would be required to "lock-in its entire shareholding in Air India and in the special objective vehicle (in case investment in AI is made through a special goal vehicle by a consortium or otherwise), up to the expiry of 3rd anniversary of the consummation of the proposed transaction". "Slots can be utilized to take benefit of India's favorable geographic position in global air travel market and develop hub for worldwide operations".

So Prime Minister Narendra Modi will win plaudits by selling Air India Ltd., the national carrier, to a new controlling shareholder. Government of India (GoI) owns 100 per cent equity of Air India.

Despite this enormous task of turning around an airline which has accumulated losses of Rs 27,231 crore between 2012-13 and 2016-17, and even in 2016-17 posted a loss of Rs 5,765 crore on revenues of Rs 22,177 crore, there will be many that will be interested.

Besides IndiGo, aviation industry majors SATS, Bird Group and Celebi have shown interest but in buying Air India's ground handling unit.



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