In second Air India disinvestment attempt, Centre issues bid document to sell 100% stake

In a second attempt to sell Air India, the central government has given ‘in-principle’ approval for strategic disinvestment of the public carrier and has invited bids from interested parties.  

The government has set March 17 as the deadline for submitting Expression of Interest.

The approval has been given for the transfer of management control and sale of 100% equity share capital of Air India held by the Centre which will include its shareholding interest in its two subsidiaries - Air India Express (AIXL) and Air India SATS (AISATS)- 100% and 50%, respectively. 

AISATS is an equal joint venture between Air India and Singapore Airlines and offers ground handling services. Air India Express is a wholly-owned subsidiary of Air India offering low-cost travel.

This is the government's second attempt to sell its stake in the national carrier, which has a debt of nearly Rs 58,351 crore (as on March 31, 2019). In the first attempt in 2018, during the first tenure of the Narendra Modi government, about 76% stake was offered. But the attempt failed as no bidder turned up for investing in Air India.

According to the new preliminary bid document issued on Monday, a debt of Rs 23,286.5 crore would remain with Air India and Air India Express at the time of closing of the disinvestment. The remaining debt would be allocated to Air India Assets Holding Ltd (AIAHL) which will not be a part of the proposed transaction.

Speaking on the disinvestment process, Civil Aviation Minister Hardeep Singh Puri said, "The newly constituted Air India mechanism, headed by Home Minister (Amit Shah), has approved to invite expression of interest from the interested bidders for strategic disinvestment of Air India."

"Due to its accumulated debt of around Rs 60,000 Crores the financial position could be described as very fragile and Air India can only be described as being under a debt trap," Puri said. 

Employees dues with arrears will be paid by the Air India assets holding company before the closing of the proposed transaction, Puri added.

The Congress slammed the government on the move and linked the proposal with the slowing economy. 

"When governments don't have money this is what they do. Government of India has no money, growth is less than 5% and millions of rupees outstanding under MNREGA. This is what they will do, sell all the valuable assets we have," Congress leader Kapil Sibal said.