In a second attempt to privatize, Govt invites bids for 100% divestment of Air India

New Delhi, January 28: In the governments yet another attempt to privatize Air India, the government on Monday began inviting preliminary expressions of interest for the purchase of airline, Air India (and subsidiary Air India Express), as part of its divestment drive to ease the fiscal deficit. However, the final date for submissions is March 17, 2020. The new bidding process marks the second time the government is looking to sell off the airline, with the initial offering in 2018, attracting no bidders.

 

This time around though, the government has sought to sweeten the offer specifically by reducing the amount of debt and liabilities any potential bidder will have to onboard. The new bid document will require a potential bidder to accept a total debt and liability burden of Rs 23,287 crore. The government will look to transfer Rs 63,113 crore of debt from the national carrier – approximately three quarters of the total value of its debt and liabilities.

The bidder will also acquire a 100 per cent stake in the airline, as opposed to a 76 per cent stake offered previously. It was believed that one of the key reasons why no bids were tabled was due to the government's insistence on retaining a 24 per cent stake in the company. The previous offer also required bidders to take on Rs 33,392 crore of debt (and liabilities), according to some reports. Air India has total debt valued at approximately Rs 58,282 and further liabilities of Rs 3,178 crore.

The majority of the debt that the offer is saddled with is attributable to the airline's current fleet. Other debt, along with working capital will remain with the government. It is reported that the potential owner of Air India will win a total of 121 aircraft as part of the flagship brand (Air India), and an additional 25 aircraft that make up Air India Express's fleet.

However, like in the previous offer, the airline's iconic Nariman Point building, as well as its headquarters near Connaught Place will be retained by the government. The new owner will be able to utilise the two locations during a period of transition. Some reports show that Air India has approximately 13,000 full-time employees that consist of 1,850 pilots and 4,600 cabin crew.