Air India draft tender lists 4 options for govt ownership

The government is looking at four options before it for retaining a stake in the disinvestment-bound Air India, which include keeping 49, 26, 24 or zero per cent stake in the national carrier with itself, according to a senior official.
The ministry of civil aviation has prepared a draft expression of interest, which was placed before the empowered committee at a meeting last week. The draft will also be examined by the core group on disinvestment and the group of ministers constituted to prepare a strategy for the privatisation of Air India, he said.
The latter will take a decision on the various proposals following which an Expression of Interest will be formally invited.

"The draft EOI prepared by the ministry gives different options to the decision making authorities. It gives the pros and cons for different options, which include retaining 49, 26, 24 or zero stake," a senior official of the ministry of civil aviation said on the condition of anonymity.
He added that there was clarity in the government that at least 51 per cent of ownership of Air India would be transferred to a private player.
Aviation think-tank CAPA had last month suggested that the government should exit Air India completely and that "any level of equity retention will deter investors due to concerns about the prospect of continued government interference post-privatisation."

Last June, the Cabinet Committee of Economic Affairs approved disinvestment of Air India and constituted a group of ministers, headed by Finance Minister Arun Jaitley, to work on the modalities of the stake sale.

The proposed EOI will also address the issue of Air India's employees and their future, the official said.
"The draft talks about employees of Air India and the Department of Investment and Public Asset Management (DIPAM) guidelines that need to be met such as the minimum benefits to be offered to the employees, when and how can their services be terminated, among others" the official added.

The document prepared by the ministry also recommends which subsidiary companies should be sold together and which can be sold as independent entities. The official hinted that the government is unlikely to keep any of the subsidiaries with itself.
The Minister of State for Civil Aviation Jayant Sinha had said earlier this month that more than 51 per cent of ownership of Air India will be offered to a private entity.
He said that the national carrier would be offered for bidding as four different entities -- Air India, its low-cost arm Air India Express and subsidiary AISATS would be one entity, while regional arm Alliance Air, Air India Air Transport Services Ltd (AIATSL) and Air India Engineering Services Ltd (AIESL) would be sold separately.

Air India has a debt of over Rs 50,000 crore. Under the turn-around plan approved by the previous UPA regime Air India has to receive up to Rs 30,231 crore from the government over a ten-year period starting from 2012. The airline has already received over Rs 26,000 crore under the package.