New Delhi intends to sell its entire stake in the debt-crippled national carrier Air India, the government announced Monday, after failing previously to secure any bids for a majority share, reports Agence France-Presse.
The airline, which owes more than Rs 60,000 crore or $8 billion, has been struggling to pay salaries and buy fuel, with officials recently warning that it would have to shut down unless a buyer was found.
On Monday the civil aviation ministry released a document inviting bids for a 100 per cent stake of Air India and 100 per cent stake of Air India Express, setting March 17 as the deadline for initial submissions.
Potential buyers would have to assume around $3.26 billion in debt, the document said.
The government was forced in 2018 to shelve plans to sell a 76 per cent stake in Air India after failing to attract any bidders.
India’s Tata Group, Singapore Airlines (SIA) and IndiGo were all linked to a takeover but subsequently ruled themselves out.
Founded in 1932 and formerly India’s monopoly airline, the company was once known affectionately as the “Maharaja of the skies”.
But it has been haemorrhaging money for more than a decade and has lost market share to low-cost rivals in one of the world’s fastest-growing but most competitive airline markets.
In November aviation minister Hardeep Singh Puri had said the airline would “have to close down if it is not privatised”.
State-run oil companies halted fuel supplies to Air India in August after it fell behind on payments, though the firms agreed to lift the suspension a month later after talks brokered by the government.
Interested bidders will be expected to take over Rs 23,286 crore of the debt — all of which is debt for aircraft that they will be taking over as the transaction, reports Times of India.
The brand name Air India, and its associated terms, will need to be retained by successful bidders for a time period that will be mentioned in the request for proposal (RFP) to be issued after March 31.
The Nariman Point HQ in Mumbai and the corporate HQ in Delhi near Connaught Place are not part of this transaction and will remain with the government. Successful bidder will be allowed to use them during the transition period for a couple of years.
With 121 aircraft in its fleet (not including the 4 Boeing 747s that will be retained with the government with an AI subsidiary not being sold for VIP use), AI’s debt as on March 31, 2019, was Rs 58,282.9 crore, with contingent liabilities of another Rs 3,178 crore.
AI has 13,629 employees (permanent and fix term contracts) with wage arrears of Rs 1,383.7 crore and a provision has been made in AI books for Rs 207-crore arrears for narrow body fleet employees.
With 25 Boeing 737s in its fleet, AI Express has Rs 1,791 crore of debt.
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