Government wants to sell entire stake in Air India
What's the story
The government wants to sell Air India and has invited bids for the same. But unlike its previous attempt in 2018, this time the government has put its complete stake in the debt-ridden airlines on sale. It also wants to divest its entire stake in Air India Express and 50% stake in joint venture Air India and Singapore Airport Terminal Services (SATS) Limited.
Context
Once a prized possession, Air India is buried under debts
Founded in 1932, Air India ferries a number of domestic and international destinations. But mismanagement increased its woes, and eventually, the airlines came under a debt of Rs. 80,000 crore. Aviation minister Hardeep Singh Puri told Parliament in December that the government had no option but to sell off the company. And for this, cooperation from employees is mandatory, Puri told unions this month.
Selling AI
After not getting a single bidder, government released new plan
In 2018, the government made the first attempt to sell Air India but was willing to give up just 76% stake. It didn't even get a single bidder. Smarting from setback, the government said interested buyers can submit their Expression of Interest (EoI) by 5 pm on March 17, 2020. The eligible bidders will be notified on March 31. However, these dates can change.
Riders
HQs, artifacts owned by Air India aren't up for sale
A statement from the government said the successful bidders will have to retain the brand name "Air India" for some time. Further, the iconic Nariman Point HQ and Connaught Place office of Air India will remain with the government. "Air India is in possession of various articles of arts, paintings, objects, and artifacts. These are not part of the proposed transaction," the government added.
Details
As compared to previous attempt, deal's conditions have changed
The last time Air India went up for sale, the bidders were expected to take over Rs. 24,576 crore of debt, and liabilities worth Rs. 8,816 crore, bringing the total to Rs. 33,392 crore. This time though, the debt has been reduced to Rs. 23,286 crore. The government wants to make current assets equal to current liabilities, reports TOI.
Eligibility
Bidders need to have net worth of Rs. 3,500 crore
Laying down the conditions for the bid, the government said an interested bidder (whether solo or a consortium) should have a minimum net worth of Rs. 3,500 crore. In the case of a consortium, each bidder should have a worth of Rs. 350 crore. All investment will happen as per Indian laws, the preliminary information memorandum (PIM), released a few hours ago, read.
Details
Criteria has been tweaked for Indian carriers
The government underlined that if a schedule Indian carrier is constituent of a consortium, and has a minimum 51% equity shareholding, the minimum net worth criteria won't apply. "However, the remaining members of the consortium, in this case, will have to meet the minimum financial capability," the statement added. Foreign airlines can't escape the minimum net worth criteria.
Potential buyers
Tata Group has expressed interest in Air India
Tata Group, obviously, has an interest in Air India. Not long ago, Tata Sons Chairman N Chandrasekaran said the group might think about taking a chance. Other possible suitors include IndiGo and SpiceJet. Air India, having 121 aircraft in its fleet, has also piqued the interest of some airlines from overseas too. However, Qatar Airways is out of the race.