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Govt to test waters for AI privatisation after budget presentation

The invitation calling for expressions of interest from potential bidders is being drafted, and will be submitted to a ministerial group that has been tasked with Air India’s privatisation.

business Updated: Jan 10, 2018 08:16 IST
Tarun Shukla
A ministerial group has been tasked with the privatisation of Air India.
A ministerial group has been tasked with the privatisation of Air India.(Reuters File Photo)

The government will invite expressions of interest from those interested in buying state-owned Air India Ltd, after the budget presentation on 1 February, a top government official said.

The move is intended to demonstrate that the National Democratic Alliance is going ahead with the privatisation of Air India despite a parliamentary panel suggesting a five-year pause.

“We will be seeking expressions of interest certainly in February,” civil aviation secretary Rajiv Nayan Choubey said in an interview on Monday.

The invitation calling for expressions of interest from potential bidders is being drafted, and will be submitted to a ministerial group that has been tasked with Air India’s privatisation, added Choubey.

In a draft report, the parliamentary standing committee on transport, tourism and culture suggested that the Union government put the privatisation plan on hold for at least five years and write off the national carrier’s debt, the Press Trust of India reported on Sunday.

The government has appointed EY, formerly known as Ernst and Young, to advise it on the privatisation exercise, in which the invitation seeking expressions of interest from would-be bidders is the first step. Cyril Amarchand Mangaldas will be the legal adviser.

The government will vet the responses to evaluate the eligibility of the potential bidders before floating a so-called request for proposal, a detailed document that “will be more precise” than the document seeking expressions of interest.

IndiGo, run by InterGlobe Aviation Ltd, and Tata Sons Ltd have shown interest in Air India’s operations.

Turkey’s Celebi Aviation Holding, Bird Group, Menzies Aviation Plc and Livewel Aviation Services Pvt. Ltd have shown interest in the national carrier’s subsidiaries.

Last week, Leslie Thng, chief executive officer of Vistara, a joint venture between Tata Sons and Singapore Airlines Ltd, said the latter “has an open mind” on looking at Air India, noting that the national airlines has a strong brand presence globally.

“If you look at the history, Air India was in fact one of the pioneers in many of the aviation launches. Air India actually has a very good reputation in some of the markets. People know about Air India—there are a lot of NRIs (non-resident Indians) who live overseas, who know about Air India. It flies to many international destinations. The brand awareness of Air India is not weak,” he Leslie Thng added.

Air India had total debt of about Rs48,877 crore at the end of March 2017—Rs17,360 crore of aircraft loans and Rs31,517 crore of working capital loans.

The airline has a fleet of about 140 planes, with a 17% share of traffic on routes linking India to international destinations and about 13% of the domestic market.

The national carrier, which is part of the world’s biggest airline grouping, Star Alliance, also has prime slots at airports across the world as also land banks and buildings among its assets.