Government calls for bids for 75% stake-sale in Air India
What's the story
The government has called for bids for sale of 76% stake in Air India (AI), which has debts of Rs. 52,000cr.
Bids have also been called for sale of its 50% stake in AISATS, a ground-handling subsidiary between AI and Singapore Airport Terminal Services.
Apart from that, AI owns 100% stake in Air India Express.
The government hopes to complete the sale by 2018-end.
Eligibility
Who can bid for stake in AI?
To bid for the national carrier, companies will have to have a net worth of Rs. 5,000cr, the government said.
Indian carriers with zero or negative net worth can also participate, provided they form a consortium with other partners and the total worth is over the mandated limit.
Airlines with negative net worth can also partner with a private equity firm to place bids.
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What about foreign investment?
In January, the government had allowed foreign investment of up to 49% in AI. But they clarified that "substantial ownership" and "effective control" of the national carrier will be with Indian nationals. Till then, foreign airlines could own 49% in other Indian airlines except AI.
Competitors
Who could be the next owner of AI?
Among Indian carriers, IndiGo had the highest net worth of Rs. 3,800cr at FY17 end. IndiGo and an unnamed international airline have officially expressed interest till now.
Other likely bidders include Jet Airways, SpiceJet and Vistara, but all of them have negative net worth.
They could form partnerships to bid for AI. Likely combinations include Jet with Air France-KLM and Vistara with Singapore Airlines.
Details
Non-core assets not to be part of the sale
Properties that won't be part of the sale include all non-core assets of AI, including its building in Mumbai and other offices.
They will become part of the special purpose vehicle (SPV), which will also include working capital loans of Rs. 33,000cr (from the total Rs. 52,000cr debt).
"We hope to finish the divestment by the year-end," Aviation Minister Ashok Gajapathi Raju had said.