At least two entities are expected to submit financial bids on Wednesday for Air India, marking an important milestone in the government’s plan to privatise the national carrier. The government had failed to attract suitors for a 76% stake in Air India in 2018 but it has sought to make the deal more attractive this time around in order to ensure that a sale takes place, they said.
The Tata Group, through a holding company, andchairman Ajay Singh, in his personal capacity, are likely to pitch for the airline. Tata is regarded as the frontrunner, according to experts. “We are very hopeful that Air India will get a new owner this time,” said a person who didn’t want to be identified.
Unlike 2018, the government plans to sell its entire stake, which includes all of Air India and low-cost subsidiary Air India Express along with a 50% stake in ground-handling company AISATS.
The government’s plan to retain a 26% stake in the airline after divestment had been seen as one of the key reasons behind the private sector not showing any interest in the airline two years ago.
“The biggest worry for the private sector last time was a government staying a partner in the airline post divestment with a government-appointed board member. Now that is gone, and that is a big plus this time,” said an industry insider, who did not want to be identified.
As part of the package, Air India will be transferred with a debt of ₹23,000 crore. The remaining debt of about ₹22,000 crore was transferred to government-owned Air India Asset Holdings Ltd (AIAHL), which will house assets such as the Air India building in Mumbai, Airlines House in the capital, four acres of land in Delhi’s Connaught Place and various housing complexes in Delhi, Mumbai and elsewhere. Air India’s subsidiaries such as Air India Engineering Services Ltd and Air India Air Transport Services Ltd will also be part of AIAHL.
The plan is to monetise these assets to help repay Air India’s debt that the government takes on before handing it over to the new owners.
The government may have to absorb at least ₹20,000 crore more of debt — money borrowed by the airline in the past two years to fund losses.
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