Thursday, January 11, 2018

Foreign airlines unlikely to rush to buy stake in AI

Bengaluru: Even though the Union Cabinet has allowed foreign airlines to pick up 49 per cent stake in Air India, international players are likely to stay away unless the government agrees to hand over management control of the airline to them.

“Just as the government decided to allow Maruti Suzuki to run the operations without any interference, it should do the same with Air India as well if it wants to attract foreign airlines to pick up stake in the airline,” Capt GR Gopinath, the CEO and founder of Air Deccan told BusinessLine.

Aviation analyst company CAPA said it expects significant interest from foreign airlines though the offer and conditions attached will determine the level of participation in the bids.

“Executing this complex transaction very effectively and within timelines and ring-fencing from potential disruption, including political, will be critical,” CAPA’s CEO for India and the Middle East, Kapil Kaul, said.

Gopinath said he expected the total valuation of Air India to be around $10 billion (without the land), of which, around $5 billion will go to the government’s kitty if any airline chooses to pick up 49 per cent stake.

“If the Centre acts with prudence and transparency and goes for a transparent tender process, it can actually get a far better valuation,” he pointed out.

Hailing the decision of the government, the pioneer of low-cost airlines in India, Gopinath said that it was a positive step but wanted the Centre to slowly withdraw from the state-owned airline.

“Air India should be allowed to be listed at the stock exchanges and have a large public holding. But it should not allow any individual business house to hold a major stake.”
10/11/18 Business Line