Indigo

Foreign Airlines Show Interest In Air India Sale As Domestic Carriers Steer Away!

AirWhizzApr 14, 2018 No Comments

Foreign Airlines Show Interest In Air India Sale As Domestic Carriers Steer Away!

Aviation Insider

It seems like no domestic carriers will be bid for Air India as the airline giants, IndiGo and Jet Airways, have released statements saying they will not take part in the national carriers disinvestment process. Reports also suggest that Tata Group will also be pulling itself out of the race.

Over the past few days, the airlines have blamed the terms of the sale for their unwillingness. In a statement given by Jet Airways last week, they said that they welcome the government’s move to privatize Air India. However, based on the review conducted by the airline and the terms of the offer in the memorandum, they will not be taking part in the bidding process.

The disinvestment process is divided into two stages:

  • PIM (Preliminary Information Memorandum) which involves receiving the letters of interest from potential bidders.
  • RFP (Request for Proposal) is the second stage of the bidding process where more details about the sale will come to light, if and when it happens.

Here are some of the terms mentioned in the memorandum that the bidders have to take responsibility of –

  • Under the proposed sell-off, the new buyer will have to take over 61 percent (or Rs 33,392 crore) of the debt burden. The current Debt of Air India amounts to Rs 54,742 crore.
  • The buyer has to safeguard the interests of 10000 – 15000 Air India employees.
  • The Owner has to list Air India on stock exchange under terms that will be decided by the government
  • The buyer has to keep the airline’s operations away from other businesses of the owner.

It is believed that British Airways, Singapore Airlines, Etihad Airways and Lufthansa have shown interest in buying Air India. Only Etihad Airways and Singapore Airlines confirmed their interest in buying the national carrier.

Etihad Airways is reportedly looking as a strong contender to bid for Air India as they have sent out feelers to the Reliance Anil Dhirubhai Ambani Group. Etihad is looking for partners to bid for Air India and is in discussion with companies other than the Anil Ambani group.

Air India has been struggling with competition from IndiGo and Jet Airways in the Indian markets. Air India market share in India has also gone down when Indigo and SpiceJet set out to grow their network. Its market share has come down to 13 percent which is nowhere comparable to the 36 percent share they had a decade ago.

The government has decided that there will be no change in the terms unless there are not enough bidders for the airline. For now, it seems like a game of wait and watch!

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IndiGo No Longer Interested In Acquiring Air India!

AirWhizzApr 06, 2018 No Comments

IndiGo No Longer Interested In Acquiring Air India!

Aviation Insider

India’s leading low-cost airline IndiGo, which is operated by InterGlobe Aviation Ltd, announced that they will not bid to acquire Air India’s entire airline business.

It is said that IndiGo was the first airline to show interest in buying Air India even before the government formally invited “Enquiries of Interest”.

The government has offered to sell 76% stake in Air India along with its subsidiary Air India Express and a 50% stake in AISATS, a ground-handling joint venture with Singapore Airport Terminal Services (SATS).

According to the president and full-time director of IndiGo, Mr Aditya Ghosh, IndiGo has expressed its interest from the first day in the acquiring Air India’s international operations and Air India Express. However, that option is not available under the government’s current plan to sell Air India. He also stated that Indigo doesn’t have the required capacity or the capability to acquire the airline and revive its operations.

This will not affect IndiGo’s plan to start international flights. Promoters of the airline had made it clear that they will start flying internationally “with or without” Air India.

IndiGo has the largest domestic market share with a 39.9% share. In fact, IndiGo is the only Indian carrier which is qualified to bid based on the eligibility criteria. According to the criteria, an airline is eligible to bid  if it has a minimum net worth of ₹5,000 crore and has generated profits after tax in at least three of the immediately preceding five financial years.

IndiGo is now officially the second airline to pull out of the bid for Air India.SpiceJet’s promoter Ajay Singh said that the airline is too small to bid for Air India and pulled itself out in January. This leaves Jet Airways and Air Vistara to bid for Air India.

Experts say that if Air India, in its present situation is bought by an airline, it will need a huge capital investment, of $6-8 billion to start the bid and more to turn the airline around.

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Bidding War Over Air India Gets Intense As IndiGo And Jet Lead The Way!

AirWhizzApr 03, 2018 No Comments

Bidding War Over Air India Gets Intense As IndiGo And Jet Lead The Way!

Aviation Insider

In a bid to extend their flight network, India’s top 2 commercial carriers, IndiGo Airlines and Jet Airways, are ready to go into a bidding war to take control over 76% stake in Air India.

The 76% of Air India on offer is worth more than 220 billion rupees ($3.37 billion), based on an Air India valuation of above 300 billion rupees. Prospective buyers have until May 14 to voice interest. Winning bidders will be announced May 28.

Interglobe Aviation, IndiGo’s Operator, has shown a keen interest in the airline’s takeover since day one and for a long time, it was the only Indian carrier who was eligible to bid for a stake in Air India, because Interglobe is the only airline company in the country with a positive net worth. Indigo is a marketing leading airline with about 40% market share. This is because of its regular flights and a reputation for reliability.

However, most of the IndiGo flights operate domestically and purchasing Air India, with its network of international routes, will surely expand IndiGo’s reach in one move.

Jet Airways has recently entered the bidding war. It will partner with international airlines such as Air France, KLM and Delta Airlines to buy the 76% stake in Air India. Buying Air India would help Jet gain advantage over immediate rivals IndiGo in international flights. In the international segment Jet Airways has a code-sharing agreement with Air France and Delta.

Apart from these two giants of the Indian aviation industry, Singapore Airlines is looking to bid as the government has allowed foreign investors to buy up to 49% stake in Air India. Singapore Airlines have shown interest in the Indian market of late. They say that India is ‘strategic market’ based on their experience with their airline Vistara, a joint venture between Singapore Airlines and Tata Group.

According to Jayant Sinha, minister of state for civil aviation, the government’s price for the Air India stake may go up, as the government will not accept bids below the minimum value that they set.

At the end of 2017, Air India increased its domestic network to 39 cities. It is also a member of the global Star Alliance.No domestic airline can match the Air Indias international service, in the Middle East and Southeast Asia. The carrier operates 137 flights a week to the Middle East, 68 to Europe and 56 to Southeast Asia. It serves popular airport hubs such as Dubai, London, and Bangkok.

The Indian government have put 150 billion rupees for three years till March 2016 to revive the national carrier. Privatisation of Air India and its subsidiaries will help ease the burden on the national budget.

India is one of the world’s most promising markets for air travel and national as well as international carriers have realized this. Once the results of the bid are announced by the end of May, whoever is fortunate enough to win the bid, is surely in for a profitable future.

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