Centre restarts Air India sale, offers 100% stake

Centre offers 100% stake in Air India, restarts sale of national carrier

The new investor will also have to continue using the Air India brand as per the terms set out in the definitive documents

The new investor will also have to continue using the Air India brand as per the terms set out in the definitive documents. (PTI Photo)

The Modi government on Monday invited bids for 100% sale of its stake in Air India and its two subsidiaries, significantly trimming the debt of the national air carrier, after a failed attempt in 2018.

The Prelimnary Information Memorandum (PIM), issued by the Department of Investments and Public Assets Management, called for submissions for initial expression of interests by March 17. The potential buyer will have to assume the debt of Rs 23,286 crore of the airline, a significant reduction from the Rs 62,000 crore in 2018.

“The Government of India (GOI) has given ‘in-principle’ approval for the strategic disinvestment of Air India, by way of transfer of management control and sale of 100% equity share capital of AI held by GOI which will include AI’s shareholding interest of 100% in AIXL (Air India Express) and 50% in AISATS,” the PIM document said.

Air India Express is a low-cost airline with operations in west Asia and south-east Asia, while AISATS, an equal-partnership venture with Singapore Air Terminal Services, provides ground-handling and cargo-handling services at Delhi, Hyderabad, Bengaluru, Thiruvananthapuram and Mangaluru.

Civil Aviation Minister Hardeep Puri said he was “pretty certain” that Air India, famous as the Maharaja of the Skies, would find a buyer and announced that the government was open to revising terms of the sale after meeting potential buyers.

The government has also reduced the eligibility criteria for the bidder from Rs 5000 crore net worth earlier to Rs 3,500 crore net worth.

For permanent employees, Puri said the successful buyer will have to set aside 3% equity shares in the airline as ESOPs. The minister said the two airlines (Air India and AI Express) have an employee strength of 17,984 out of which 9,617 were permanent employees.

The bid document states that 36% of the permanent employees would retire over the next five years.

It stated that the firm that acquires Air India shall ensure that the airline continues to operate for a period of three years from the date of the closing the proposed transaction.

It also puts restrictions on the investor that no assets of the two airlines would be disposed of for one year from the date of sale and any such action except through the sale or transfer in the ordinary course of business and this shall not exceed Rs 1,000 crore.