New Delhi, Jan 27 (SocialNews.XYZ) In its second attempt to sell national carrier, the government on Monday invited expression of interest (EoI) from prospective buyers for divesting its entire 100 per cent stake in Air India along with its wholly-owned subsidiary Air India Express and 50 per cent ground-handling joint venture AISATS.
The last date for submitting the EoI is March 17, 2020. The qualified bidders would be intimated by March 31.
While the flagship Air India has been put on the block, four of its subsidiaries which include engineering arm AIESL, feeder airline Alliance Air, ground-handling and cargo service provider AIATS and hotel arm Hotel Corporation of India (HCI) would not be part of the proposed disinvestment.
The Modi government's move to sell Air India and its subsidiaries had failed in 2018 as not a single private party evinced interest. While it had earlier offered 76 per cent stake in the airline along with management control, the government has offered to sell its entire stake in the airline this time.
As government proposed to hold 24 per cent stake in the company and corresponding rights, many prospective buyers had apprehensions about interference and hence stayed away from the bid process. High amount of debt and adverse macro environment such as high fuel prices were cited as major reasons for the no-show.
Global consultancy EY is the transaction advisor for the strategic disinvestment of Air India.
As per preliminary information memorandum (PIM) inviting the EoI, Air India is one of the most extensive flight service providers in India with network coverage of 98 destinations (56 domestic destinations with around 2,712 departures per week and 42 international destinations with around 450 departures per week).
The airline offers 75 additional destinations through its secondary network of code share operations covered under 25 code share agreements with foreign carriers.
During FY 2019, Air India carried around 22.1 million passengers and recorded operational revenues of Rs 25,508 crore.
The government has sweetened the deal this time taking a major chunk of the debt from the books of Air India.
The PIM said that at the time of closing of the proposed transaction, debt of Rs 23,286 crore will remain with Air India and its subsidiary Air India Express. The remaining debt will be moved to Air India Assets Holding Ltd (AIAHL).
"It is clarified that there would be no re-allocation of debt and liabilities of AISATS. Additional details on debt and liabilities re-allocation may be provided at the RFP stage," the bid document said.
Air India has a total debt of about Rs 60,000 crore. It has never reported a net profit since 2007 and its accumulated loss in the past decade is estimated to be about Rs 70,000 crore.
Source: IANS
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