Airports may find few buyers

One banker said it will be difficult for buyers to do adequate due diligence during lockdown, which would particularly curtail foreign interest.

The government’s move to raise capital by privatising half a dozen airports through 50-year concessions will find few takers when the aviation industry is facing acute financial stress, industry experts said.

Airport sale prospects won’t improve till airlines can get their businesses in order. (Shankar Narayan/Hindustan Times)

Investment bankers Mint spoke to expect that if the government proceeds with the privatisation plan, it might find only two-three serious bidders that are able to raise the required debt and equity in a liquidity-starved market, lowering the chances of fair price discovery.

One banker said it will be difficult for buyers to do adequate due diligence during lockdown, which would particularly curtail foreign interest. “As the more profitable public airports are going under the hammer first, the government will get less than fair value on many of them,” he said requesting anonymity.

On day four of her five-day economic stimulus announcements, finance minister Sitharaman said the bid process for the six airports will start soon.

The six airports are likely to be Amritsar, Varanasi, Bhubaneswar, Indore, Raipur and Tiruchirapalli, owned and Airports Authority of India.

“Now we can almost certainly say two or three airlines may not survive the current crisis,” said a senior official with a budget carrier, who requested anonymity. “What is announced is simply rearranging deck chairs on the Titanic, while gaping hole from the iceberg continues to take on water,” the official said, were “business as usual” steps.