The government expects to complete the privatisation of Air India by year-end and the winning bidder is likely to be known by the end of June, Union minister Jayant Sinha said on Friday.
The debt-laden carrier, which is staying afloat on taxpayers’ money, would be put up for sale as “four different entities”, while private players can have at least 51% stake in the airline.
The Minister of State for Civil Aviation said the information memorandum for the proposed strategic disinvestment of Air India would be issued in the next few weeks. The memorandum would lay out details about various aspects, including what would be available for bidding, assets and how much stake the government would own, he told reporters here.
“We expect to have a winning bidder by the end of June and the legal closing of this transaction by end of this calendar year,” Sinha said, adding that so far two formal expressions of interest have been received by the ministry.
Legal closing means that by that time, “all of the legal agreements, security clearances, transfer of assets, transfer of title, deeds, everything will be complete. So Air India will be operated by somebody else”, he noted.
The expression of interest in Air India disinvestment has come from no-frills airline IndiGo and a foreign bidder, about whom details were not disclosed by the minister.
As part of reviving the ailing airline, the government has decided on its strategic disinvestment last year and a group of ministers, headed by Finance Minister Arun Jaitley, is working out the modalities of the stake sale.
“We are privatising Air India. That means more than 51% of ownership of Air India is going to be transferred to private sector. We will be transferring control to the private sector, that means government’s ownership will be 49 % or less,” Sinha said.
He also noted that Air India would be transferred to the private sector just like British Airways, American Airlines, Lufthansa and Qantas.
According to the minister, 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 would be a separate entity. Besides, Air India Air Transport Services Ltd (AIATSL) and Air India Engineering Services Ltd (AIESL) would be sold separately, he said. AISATS is a 50:50 joint venture between Air India and Singapore Airlines’ group entity SATS Ltd.
Under the turnaround plan approved by the previous UPA regime, Air India is to receive up to Rs 30,231 crore from the government, subject to meeting certain performance thresholds, over a ten-year period starting from 2012.
The airline has already received more than Rs 26,000 crore under the package.
For 2018-19, the carrier has been allocated Rs 650 crore in the Union Budget.
In June 2017, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle nod to the strategic disinvestment of the airline -- which has a debt burden of more than Rs 50,000 crore.
“The government has also initiated the process of strategic disinvestment in 24 CPSEs (Central Public Sector Enterprises). This includes strategic privatisation of Air India,” Jaitley had said in his Budget speech on Thursday.