The government has invited an Expression of Interest (EoI) from potential investors for buying 100 percent of Air India and its stake in two subsidiaries, significantly relaxing bidding norms in terms of debt and eligibility, in its latest attempt to privatise the debt-laden state-run airline.
The deadline for submission of EoI for 100 percent divestment in Air India and the airline’s stake in low-cost unit Air India Express and airport services company AISATS is March 17, according to a preliminary information memorandum issued on Monday.
Air India disinvestment: The Government of India (GOI) has set 17th March as deadline for submitting Expression of Interest https://t.co/iwrMT9FRWA
— ANI (@ANI) January 27, 2020
Air India Express is a wholly-owned subsidiary of Air India. The airline owns 50 percent of AISATS. Individuals and consortia can bid for the airline.
The government has struggled at least twice in the past two years to privatise loss-making Air India due to a lack of interest from bidders. One reason for the failure was that the government was unwilling to fully exit the airline, looking to sell only 76 percent stake.
The huge debts and bloated workforce too have proved to unattractive for potential bidders.
Now, the government has relaxed bidding norms to coax investors to buy the airline.
The bidding consortia will be saddled with only Rs 23,286 crore of the total Rs 60,000-crore debt of Air India. As for eligibility, the lead member of a consortium can have 26 percent shareholding. The earlier criterion set a holding of 51 percent in a consortium.
The minimum shareholding in a consortium has also been eased to 10 percent, potentially enabling more entities to bid as part of a consortium. The net worth for eligible bidders has been relaxed to Rs 3,500 crore from Rs 5,000 crore.
The government has been pumping money and hived off some debt to keep the airline aloft and ready for sale.
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