Govt wants to sell 76% stake in AI; new owner to bear 48% of Rs 470-bn debt

Minimum net worth requirement to bid for Air India set at Rs 50 bn

The government plans to sell 76% stake in Air India, according to the preliminary information memorandum released today on strategic disinvestment of the national carrier.

The Civil Aviation Ministry has sought Expression of Interest (EoI) for the stake sale in the loss-making carrier and two of its subsidiaries.

According to the memorandum, the government plans to offload 76% equity share capital of the national carrier as well as transfer the management control.

Management or employees can participate directly in the bidding process or by way of forming a consortium, as per the memorandum. Out of Rs 470-billion debt, new owner will bear only Rs 245.76-bn debt. Rest will be hived off to a Special Purpose Vehicle.

Last date for expressing interest is May 14 and shortlisted bidders to be intimated on May 28. Minimum net worth requirement to bid for Air India set at Rs 50 billion.

Ernst & Young LLP India has been appointed as transaction advisor by GoI for advising and managing the proposed strategic disinvestment of Air India Limited.

The information memorandum said the transaction will involve Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.

In June 2017, the Cabinet Committee on Economic Affairs (CCEA) gave in-principle nod to the strategic disinvestment of the airline, which has a debt burden of over Rs 500 billion.

Subsequent to the decision, the Air India Specific Alternative Mechanism (AISAM), headed by Finance Minister Arun Jaitley, was set up to decide on specific issues.

The national carrier is staying on taxpayers' money under the turnaround plan approved by the previous UPA government in 2012.