Hinduja and US-based Interups join race to acquire cash-strapped Air India

NY-based fund wants govt to include maintenance unit in deal

The Hinduja Group and Interups , the US-based fund, have decided to join the race to acquire Air India, even as the central government prepares the bid document for the loss-making airline’s sale.

The Hinduja Group had earlier evinced an interest in taking over Jet Airways, but did not make a formal bid as it felt Air India offered better opportunities. “We are looking at Air India and will take a decision once the bid documents are in place,” said a source.

The transfer of Rs 29,500 crore of Air India’s debt to a special purpose vehicle — Air India Assets Holding — has come as a boost for bidders as the finance cost of the airline will fall substantially. The sale of 100 per cent equity of the airline has also enthused bidders, unlike the government’s previous offer of 76 per cent in the last round of sale held in May, which failed to attract any bidder, said the source.

Interups, which has bid for Lavasa Corporation and The Claridges Hotel in New Delhi, said it was waiting for the Indian government to float the bid document on Air India and that it will be a serious contender.

“We have opened a dialogue with the ministry, and our CEO Louise Jones will be in India next week (to discuss the issue). We have some concerns on non-inclusion of maintenance, repair, and overhaul (MRO) assets in the acquisition and would put our appeal before the government, as without MRO, it will be difficult for our identified operators to manage aircraft maintenance,” said Laxmi Prasad, chairman and chief business architect of Interups. 

 

The New York-based fund said it has the backing of investors and managed to execute these transactions successfully and was looking at the asset with a 20-year vision. The Tata Group had also evinced an interest in Air India, but might not go ahead over fears of litigation. The group already has two airlines in its fold, Vistara and Air Asia India, which are planning to add 80 aircraft in the coming months.

The sale of Air India to a private player is important for the Indian government as it has had to pump in Rs 30,000 crore of tax payers’ money into the airline since 2012. The airline, however, has not made money since the merger between Air India and Indian Airlines in 2007.
 

Apart from Air India, the government is also looking to sell Air India Express and its 50 per cent stake in Air India SATS Airport Services.

Union Minister Piyush Goyal’s statement, made in Davos earlier this week, that he would have bid for the airline if he hadn’t been a minister has also gone down well with potential bidders. 

The airline has some of the best bilaterals the world over and is a well-managed and efficient airline, Goyal had said, adding that it was nothing short of a “gold mine”.