Sunday, December 03, 2017

Government to sell Air India’s domestic, international operations together

New Delhi: The government will not separately sell the international and domestic operations of Air India (AI) and interested parties will have to bid for them together. Bids will be sought for AI's domestic and international operations as an "integrated airline", Union minister of state for aviation Jayant Sinha said on Friday.
Interested parties will be allowed to bid separately for subsidiaries of AI. The national carrier has five subsidiaries — low-cost airline AI Express; ground-handling arm AI Air Transport Service; maintenance, repair and overhaul arm AI Engineering Services; regional operator Alliance Air; and Hotel Corporation of India. which runs Centaur hotels.
"We have so far received formal expression of interest (EoI) from IndiGo for AI's airline arm. For the groundhandling and MRO subsidiaries, a few others have done the same," Sinha said. Some players, including Tatas, have informally indicated interest in AI's airline operations.

IndiGo's EoI was for the "international airline operations of AI and AI Express. Alternatively, it is equally interested in acquiring all of the airline operations of AI and AI Express". Now Sinha has made the government's intention clear that AI's international and domestic operations will not be sold separately.
Ernst & Young (EY) is the transaction adviser for the AI sale. Sinha said, "The divestment of AI is a time-bound process and we expect to award the bids in six-to-eight months. We are going to provide flexibility in the bidding process. Bidders can bid for as many subsidiaries as they want. The transaction adviser will call for multiple bids. It will be a market-driven process."
An AI-specific alternative mechanism or group of ministers headed by FM Arun Jaitley will decide on aspects like who all should be eligible to bid for the airline — basically to see if foreign airlines in JV with Indian or foreign partners should be allowed to buy the Maharaja. Current rules allow Indian carriers to be owned fully by foreign entities but put a cap of 49 per cent on ownership by foreign carriers. This panel will also decide on issues like treatment of AI's unsustainable debt and hiving off certain assets to a shell company.
02/12/17 Times of India