Centre invites bids to sell 76% stake in Air India

  • Centre invites bids to sell 76% stake in Air India

Centre invites bids to sell 76% stake in Air India

Each member of the consortium has to hold at least 20 per cent share in the consortium and at least 20 per cent equity share capital of the company (special goal vehicle) promoted by the members of the consortium for acquiring the government stake being disinvested. Additionally, the government will sell its entire stake in the budget arm Air India Express and 50 percent in the ground handling unit, the statement added.

As part of strategic disinvestment of Air India (AI), the Government on Wednesday said that it has invited bids for the sale of 76 per cent stake in Air India, which has 100 per cent stake in low-priced worldwide subsidiary Air India Express. It is a joint venture between the debt-laden Indian carrier and Singapore Airport Terminal Services.

The NDA government's move earlier to allow FDI by foreign airlines in debt-ridden Air India upto 49 per cent was an indicator that the Government was serious about disinvestment in the loss-making cash-strapped national carrier so as to bring about fresh infusion of funds.

As per the plan, the Air India group will be divested as four different entities and that the "information memorandum" will be issued in sometime.

The government expects that the winning bidder will be identified by the end of June and that the legal closure of the transaction will take place by the end of this year.

As far as the proposed strategic disinvestment process is concerned, Ernst & Young India has been appointed as key transaction adviser to take it forward, according to a Ministry official. This figure is expected to rise by another Rs 3,500 crore by the end of this financial year.

According to statement, The Centre has sought a minimum net worth of Rs 5,000 crore for Air India bidders.

The entity that acquires Air India will bear less than half out of the total debt borne by Air India.

Air India's woes stem from a huge debt overhang run up to buy 111 new aircraft, made worse by a downturn in the travel market post 2008 and a spike in oil prices.