Government to offload 76 per cent stake in AI

Taking a decisive step in its attempt to privatise the debt-ridden national carrier, Air India, the government on Wednesday invited expressions of interest from bidder seeking to acquire controlling stake in the entity.

The government will sell 76 per cent stake in the wholly-owned national carrier; 100 per cent stake in low cost international carrier Air India Express; and 50 per cent in Air India SATS Airport Services. Of the company’s total debt of Rs. 50,000 crore, bidders for airline arm will have to take over a debt of Rs. 24,576 crore and liabilities of Rs. 8,816 crore.

As per the Preliminary Information Memorandum (PIM) issued on Wednesday, the bidders need to have a minimum net worth of Rs. 5,000 crore and net profit for three preceding years. However, the rule has been relaxed for Indian carriers to enable them to participate in the bid process.

Air India has a strong fleet size of 115 aircraft and currently serves around 39 international destinations. It also has the largest market share among Indian carriers on the overseas routes. Also the domestic airline’s revenue of Rs. 255 billion is the highest among all Indian carriers. Hence, the proposed sale of the entity has attracted interest from local and foreign carriers alike. The successful bidder is expected to be finalised by September-end and will have to retain AI brand name for a specific period.

This move by the NDA government, in its last year in office before the 2019 Lok Sabha elections, on a politically sensitive matter reinstates its appetite for economic reforms in the country.