NEW DELHI: After its failed bid in 2018 to divest 76% in Air India, the government on Monday renewed efforts to sell the debt-trapped national carrier by sweetening the deal to attract buyers. According to the bid document issued by the Department of Investment and Public Asset Management on Monday, the government will sell 100% stake in the carrier as well as subsidiary Air India Express, and its entire 50% stake in ground-handling firm Air India SATS Airport Services, a 50:50 joint venture with Singapore Airport Terminal Services.
The government plans to sell all three entities together. The management control of the national carrier will also be transferred to the new investor, who cannot change Air India’s brand name. To attract more potential buyers, the government has also relaxed the eligibility criteria for bidders. Only those with net worth of `5,000 crore were allowed to bid earlier, which has now been brought down to `3,500 crore.
In a major climb down from 2018, the government will absorb bulk of the airline’s `60,074 crore debt passing on just `23,286.5 crore debt burden to the buyer. The remaining debt will be transferred to a special purpose vehicle, Air India Assets Holding. “Due to its accumulated debt, the financial position is fragile and Air India is under a debt trap,” said Civil Aviation Minister Hardeep Singh Puri, adding that private investors can turn it around with efficient management.
The minister said the government is willing to tweak the terms further based on suggestions from potential investors. “The bidders will come back to us with queries and suggestions and we are open to revising and refining it.”
The deadline to submit bids is March 17. Qualified bidders will be notified on March 31. The buyer gain control of Air India’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, plus 900 slots at airports overseas. On the flip side, the buyer will have to offer 3% of the value of the airline’s equity as stock options to 9,400-odd permanent employees. Air India also has 3,600 fixed-term contract staff.