Friday, August 21, 2020

Air India privatisation: At least 6, including Lufthansa and Etihad, in race for Maharaja

At least half a dozen entities including Hinduja Group, Germany’s Lufthansa, the UAE’s Etihad Airways, Singapore Airlines and the Tata Group may throw their hats in the ring, as the government has expedited the process to sell sick, state-owned airline Air India (AI), sources privy to matter said.

Several steps are being taken to lure the buyers including putting in a place a plan to trim the airline’s 9,400-strong workforce expeditiously.
Logistic issues due to travel restrictions imposed in the wake of Covid-18 have forced the Department of Investment and Public Asset Management (DIPAM) to extend the expression of interest (EoI) submission deadline multiple times. A call would taken next week if it needs to be extended further from August 31, the sources added.

A large number of queries on AI have been received from interested parties and other stakeholders including Lufthansa and Singapore Airlines despite Covid-19 casting a shadow on the aviation sector, which is one of the worst affected globally, one official said.

While NRIs have been allowed to own 100% in AI, the government has retained a provision that substantial ownership and effective control of the airline must remain with an Indian entity. That means, foreign investors/airlines, which can own up to 49%, would have to team with an Indian partner to bid for AI.

With losses further mounting in the aftermath of Covid-19 outbreak, Air India recently decided to send some unspecified number of employees on ‘leave without pay’, mirroring a recent global trend to cut costs as planes have been grounded due to pandemic. According to a scheme approved by the board of directors in its meeting held on July 7, the AI CMD can send an employee without pay ranging from six months or for two years and the same can be extended up to five years.
21/08/20 Prasanta Sahu/Financial Express
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