India to invite initial bids for Air India stake sale in next couple of weeks
The cabinet has yet to decide on what to do with the carrier’s debt burden of $8.5 billion.business Updated: Mar 08, 2018 14:56 IST
India will invite initial bids for a stake sale in state-run carrier Air India in the next couple of weeks, Civil Aviation Secretary Rajiv Choubey said on Thursday during an airshow in the southern Indian city of Hyderabad.
Prime Minister Narendra Modi’s cabinet gave the go-ahead last year to sell the flagship carrier, after successive governments spent billions of dollars in recent years to keep it solvent. However, the government has yet to decide on what to do with the carrier’s debt burden of $8.5 billion.
Companies including low-cost Indian carrier IndiGo, owned by InterGlobe Aviation, Tata Group and Turkey’s Celebi Aviation Holdings, have expressed an interest in buying some of Air India’s businesses.
In January, India cleared a proposal to allow foreign investors to own up to a 49 percent stake in Air India, paving the way for global airlines to also bid for the loss-making carrier.
A committee of ministers, including India’s finance minister, is in charge of the divestment process and has hired Rothschild and Ernst & Young as consultants.
The government is condsidering splitting up Air India’s various businesses before offering it for sale to make it attractive to potential buyers.
Air India has six subsidiaries – three of which are loss-making – with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.
The government has injected $3.6 billion since 2012 to bail out the airline which was founded in the 1930s and is known to generations of Indians for its Maharajah mascot.