Winning bidder for Air India to be known by June-end: Sinha

03 Feb 2018

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The government expects to complete the privatisation of Air India by the end of this year and the winning bidder is likely to be known by the end of June, union minister of state for civil aviation Jayant Sinha said on Friday.

The debt-laden national carrier would be put up for sale as ''four different entities'', and private players can have at least 51 per cent stake in the airline, Sinha said.

The first company will include Air India's domestic and international operations, besides Air India Express and Air India SATS. The second will comprise its engineering arm, the third ground handling and the fourth Alliance Air. Interested parties can bid separately for the four entities.

A group of ministers led by finance minister Arun Jaitley will decide on whether the government will retain a stake and its extent, but management control will be handed over to the new owner, Sinha said at an event in New Delhi.

About a week back, civil aviation secretary R N Choubey had said a foreign player had expressed "unsolicited expression of interest for AI's airline arm". (See: Unnamed ''foreign player'' keen on Air India stake: ministry).

Sinha added that the disinvestment of state-owned helicopter services firm Pawan Hans Ltd was also on track.

He said the information memorandum for the proposed strategic disinvestment of Air India would be issued in the next few weeks. The memorandum would lay out details about various aspects, including what would be available for bidding, assets and how much stake the government would own, he told reporters here.

''We expect to have a winning bidder by the end of June and the legal closing of this transaction by end of this calendar year,'' Sinha said, adding that so far two formal expressions of interest have been received by the ministry.

Legal closing means that by that time, ''all of the legal agreements, security clearances, transfer of assets, transfer of title, deeds, everything will be complete. So Air India will be operated by somebody else'', he noted.

The expression of interest in Air India disinvestment has come from IndiGo and a foreign bidder about whom details were not disclosed by the minister.

''We are privatising Air India. That means more than 51 per cent of ownership of Air India is going to be transferred to private sector. We will be transferring control to the private sector, that means government's ownership will be 49 per cent or less,'' Sinha said.

He also noted that Air India would be transferred to the private sector just like British Airways, American Airlines, Lufthansa and Qantas.

Under the turnaround plan approved by the previous United Progressive Alliance government, Air India is to receive up to Rs30,231 crore from the government, subject to meeting certain performance thresholds, over a ten-year period starting from 2012.

The airline has already received more than Rs26,000 crore under the package. For 2018-19, the carrier has been allocated Rs650 crore in the Union Budget.

In June 2017, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle nod to the strategic disinvestment of the airline,- which has a debt burden of more than Rs50,000 crore.

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