Tuesday, May 15, 2018

Air India divestment: No buyers for national carrier, Centre to take this big step

The government may relax some of the terms for its proposed divestment of debt-laden Air India (AI) till now in the light of no interest elicited from any buyers.

“It’s only a few weeks before the deadline (May 31) for submission of Expression of India (EoI) for the proposed 76% divestment of lossmaking Air India expires but there is not a single serious interest till now. The government may look at relaxing some conditions to make it (Air India) attractive to buyers,” a source, who spoke on condition of anonymity, told DNA Money.

Another source, who also did not want to be named, said some tweaking of terms in the tender inviting interest from buyers could be looked at by the government.

“They (government) may not change it (terms) completely, but offer assurances by slightly tweaking some of the terms to improve the interest level. They made a very good effort for selling the airline and you cannot say they did not try,” he said.

The last date for submission of EoI for the AI’s stake sale in state-run Air India is May 31. It has been extended from the earlier deadline of May 14. The government has said it announce the winner of the bid on June 15.

R N Choubey, civil aviation secretary, recently told the media that there has been “great deal of interest for Air India”.

The current terms and conditions for sale of the loss-making national flag carrier have failed to appeal several major airlines, including IndiGo and Jet Airways.

According to the first source, it was issues relating to employees that were persistently coming in the way of attracting prospective bidders, besides the huge debt and flawed operating model of the airline, which was mired in huge liability.
The balance-sheet of the AI showed that as on March 31 2017, its total debt was Rs 45,915 crore, of which Rs 34,775 crore was long-term debt and Rs 31,054 was short-term debt. The total interest pay-out was Rs 4235.8 crores in the same period.
15/05/18 ZeeBiz