Government May Not Sell Air India If The Price Is Not Right!

Civil Aviation Secretary, Mr. R.N.Choubey, announced on Tuesday that government may pull the plug on sale of Air India if they don’t get the right price for the airline.

He said that the government holds the right to sell Air India and if the bid price is found to be inadequate they may consider not selling the airline. However, he also said that there is still hope and the national carrier may fetch a good price.

In March 2018, the government had decided to sell 76% stake in Air India, along with its subsidiary Air India Express and 50% stake in its ground handling joint venture AISATS, as a single entity.

The Expression Of interest(EoI) has to be submitted by interested companies by May 31^st. The qualified bidders will be selected by June 15 and the government will release a Request For Proposal (RFP) which would be a more detailed document on the disinvestment of the airline.

The Successful bidder will be known by end of August after they get the security clearance and are verified by the DGCA that the substantial ownership and effective control will go to an Indian according to FDI norms.

The government will decide the ‘floor’ price for Air India after the financial bids have been received. They have hired Ernst & Young as its transaction advisor to decide on the airline and its asset’s value, which will be used to fix the floor price.

Domestic and foreign firms had shown interest in the airline sale, but many backed out after the EoI was released. Aviation experts say that the reasons for domestic airlines opting out from the bid are as follows-

• The New buyer will have to take over 61 percent (or Rs 33,392 crore) of the debt burden.
• The winning bidder has to Retain 10000 – 15000 Air India employees.
• The government will have 24% stake in the airline after the sale.

Foreign players such as International Airlines Group (IAG), Singapore Airlines, Lufthansa, Etihad and other non-aviation firms have shown interest in the airline, however, they will have to partner with Indian companies to bid for the airline.