Unnamed "foreign player" keen on Air India stake: ministry

A foreign player has expressed interest in acquiring a 49-per cent stake in the soon to be privatised Air India. According to The Times of India, civil aviation secretary R N Choubey told the paper this company has made an "unsolicited expression of interest for AI's airline arm".

The cabinet recently approved private investment of up to 49-per cent in the ailing national carrier (See: Centre reverses stance: Air India may be sold piecemeal). 

While the identity of this player and whether it is an airline is not being revealed, Singapore Airlines (SIA) is among the foreign players that are looking at AI's disinvestment process with interest, according to the report. Its JV airline with Tatas, Vistara, has an "open mind" for AI if it makes business sense. "SIA is very keen on AI," said a person in the know was quoted as saying.

Qatar Airways is the other global major that wants to start a domestic carrier in India and has for long wanted to pick up a stake in IndiGo. Incidentally IndiGo has given a formal expression of interest for AI's airline arm.

"As of now it will not be possible to say who this foreign player is and whether it is a foreign airline or some other company. We need to check with them if they are okay with their identity being revealed at this stage," said a senior ministry official.

However it is likely that the foreign player is an airline as government had earlier this month allowed foreign airlines to invest up to 49 per cent in Air India, with the condition that AI's substantial ownership and control (SOEC) remains with the Indian partner and Indian nationals.

The Times of India's sources say at the moment, Tata-SIA and IndiGo are the main contenders for AI's airline arm. Jet Airlines with international partners like Air France-KLM is waiting for the fine print of what the government offers in AI divestment.

"Qatar Airways' preferred partner airline in India is IndiGo but the latter is adequate funded and has not said yes to the former's offer to pick up a stake in it. Qatar is facing its own issues with neighbours and India has not been given enhanced its flying rights. So as of now, the likelihood of Qatar Airways coming forward for AI are not too high," said an industry insider.

The government has decided to sell AI and AI Express together, while the ground handling, MRO and Alliance Air (regional airline arm) will be sold as separate companies.

Apart from almost 28,000 employees, AI has accumulated debt-cum-losses of over Rs50,000 crore, possibly as high as Rs70,000 crore.

The sale is expected to be completed by the end of this year, before preparations for the next general election begins in full swing. Successfully selling off AI - long seen a drain on the exchequer - will be one of the biggest reform moves by the Modi government.