Centre targets Rs 15,000 cr with Air India sale: Report

The Centre is targeting to get at least Rs 15,000 crore after the divestment of Air India, Air India Express Ltd and Air India SATS Airport Services Private Ltd, officials in the know of the process told Business Standard.

Centre has appointed RBSA Advisors for Air India valuation and the formal price will be finalised by a group of ministers after the financial bids are received, said the report.

Read | Budget 2021 | Where India stands on divestment and where it is headed

One of the bankers working on the account told the publication that some bidders were reluctant to invest in assets like airport slots and bilateral rights since those cannot be traded in India.

“The suitors’ plans revolved around doing sale and leaseback of Air India’s owned aircraft and earn liquidity. But with the pandemic, the new owner may not require those aircraft or good value for those in the lease market,” the banker told the publication.

Read | Air India employees' interest will be protected: Hardeep Singh Puri

Air India had incurred a net loss of about Rs 2,570 crore in the first quarter of 2020-21 as compared to a net loss of Rs 785 crore sustained in the corresponding period a year ago

After its failed attempt at selling Air India in 2018, the government, in January 2020, restarted the divestment process and invited bids to sell 100 per cent of its equity in the state-owned airline, including Air India's 100 per cent shareholding in Air India Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd. Air India has seen losses ever since its 2007 merger with domestic operator Indian Airlines.

Read | The employee group that bid for Air India

In 2018, the government had offered to sell its 76 per cent stake in the airline but the bidders were required to take over the entire debt amount, one of the reasons why the attempt was unsuccessful as Air India's debt stands at over Rs 60,000 crore.

Later in 2019, a major chunk of the debt was transferred from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL). This time around, the government has given the freedom to potential buyers to decide on the amount of the airline's debt they want to take on as part of the transaction. Tata Group and US-based fund Interups Inc are among Air India's potential buyers.

With the process coming to a halt due to the Covid-19 pandemic, the stake sale would likely be wrapped up only in the next fiscal.