Centre’s EoI draft gives 4 options to offload 51-100% in Air India

NEW DELHI: The government is readying to shed between 51% and 100% stake in Air India and has listed four possible options for divestment in the national carrier in the draft inviting expressions of interest.

The EoI document is likely to be out by the first week of March.

“There are four options in the EoI draft — the government can keep 49%, 26%, 24% or 0% stake in Air India post divestment,” said a senior aviation ministry official, who did not wish to be identified.


The alternative mechanism — headed by finance minister Arun Jaitley, formed to guide the ailing airline on privatisation — could also look at options beyond this, the official said.

The draft expression of interest also talks about barring the future owners from firing employees immediately after takeover, he said. The issuance of the EoI document on Air India will kick-start the process of privatisation of Air India, which the government wants to finish by the end of 2018.

The EoI will also mention the combination of companies that will be sold by the government.

While Air India will include its core aviation assets packaged with low-cost subsidiary Air India Express and AI-SATS, a ground handling joint venture with Singapore Airport Terminal Services (SATS), Alliance Air and the ground handling and engineering subsidiaries will be sold separately.

All non-core assets, such as the Air India building in Mumbai and other offices, will not be part of the sale and become part of the special purpose vehicle (SPV), which will also house the working capital debt of the company, the official said.

Air India has a total debt of Rs 52,000 crore, of which about Rs 33,000 crore is on account of working capital loans, which will be transferred to the SPV, EThad first reported on October 2, 2017.

Civil aviation minister Ashok Gajapathi Raju had earlier told ET in an interview that Air India liabilities would be more than the projected Rs 52,000 debt, as the national carrier owes money to its vendors too.

“The airline has debt and dues to be paid to vendors. The airline owes money to (vendors) like oil marketing companies, the Airports Authority of India and many more. Now, when you add the dues with debt, total liabilities would be much more. The fact is that the finances of Air India are bad. It is a good airline otherwise. In this existing form, it is highly unlikely that anyone will pick it up,” he said.

IndiGo is the only Indian carrier that has officially shown interest in buying Air India, while the government has said that an unnamed foreign carrier has also evinced interest.

The Tata Group, which has stakes in Vistara and AirAsia India, has also been mentioned as a possible suitor.

Other companies such as Bird Group and Celebi, both of which are involved in ground handling, have shown interest in that part of Air India’s business.