The deadline for submission of expression of interest in Air India’s stake sale has been extended to May 31 from May 14, the government announced on Tuesday.
Consortia keen to buy Air India have also been allowed to change their composition within 15 days of the request for proposal being issued. Earlier, no changes were allowed after submission of an expression of interest.
These clarifications were issued over a month after the Ministry of Civil Aviation released a preliminary information on memorandum containing the details of the disinvestment procedure of Air India, following which it received queries from interested bidders on the sale of the national carrier.
The government has proposed to sell 76 % of Air India along with low-fare subsidiary Air India Express and a 50 % stake in AISATS, a groundhandling joint venture with Singapore Airport Terminal Services, as a single entity. The new owner will have to take on the debt of ₹33,392 crore.
Interested bidders that qualify for the sale process will be finalised by June 15, following which the request for proposal will be floated. The government aims to finish the transaction by the year-end.
Clarification after concerns
Following concerns over the government requiring the selected bidder to maintain an arms-length distance between the functioning of Air India and other businesses, it was clarified on Tuesday that the buyer will be able to realise operational synergies.
“Further clarified that operational synergies span the full range of business activities associated with running a large global airline including inter alia, HR policies, operations, sales and marketing, revenue management, procurement and contracting financial management and business strategy,” the Ministry of Civil Aviation said in a corrigendum.
However, several questions regarding the government’s interest in retaining 24 per cent stake, employee benefits and severance package, as well as the high debt size went unaddressed with the ministry merely saying that the request for proposal will provide more details.
An aviation industry insider reacted to the replies from the government and said, “Core issues of government stake, debt and employees not addressed. It is unfortunate that leading airlines are unlikely to show much interest in the disinvestment process."
