Air India Disinvestment: Civil Aviation Minister Jyotiraditya Scindia says final bids today;Tata, SpiceJet in the race
New Delhi/IBNS: The government has started the process of financial bids for the cash-strapped national carrier Air India (AI) on Wednesday as Civil Aviation Minister Jyotiraditya Scindia said September 15 date is fixed for the process and will not be changed, according to media reports.
"The Tata Group, through its holding company and SpiceJet chairman Ajay Singh, is likely to make its financial bid for the airline in his personal capacity," an industry source told ANI. "We are very optimistic that this time Air India will get a new bidder," a government source said on the condition of anonymity, reported ANI.
Air India is burdened with a huge debt of around Rs 43,000 crore of which Rs 22,000 crore will also be transferred to the Air India Asset Holding Limited (AIAHL), according to the report.
"The debt of the airline has now increased to Rs 43,000 crore and all these loans are under government guarantee. And the government will bear this debt before the airline is transferred to the new owners," ANI quoted as source as saying.
Air India's subsidiaries such as Air India Engineering Services Limited (AIESL) and Air India Air Transport Services Limited (AITSL) will also be part of AIAHL.
The government is selling an entire 100 per cent stake in Air India that will give the successful bidder access to 1,800 international and 4,400 domestic landing and parking slots at domestic airports, as well as 900 slots at airports overseas, stated media reports.
The buyer will also get 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports and 100 per cent stake of Air India Express, the low cost carrier owned by Air India.
Why did the govt fail to attract bids in the first attempt?
In the first attempt, two years ago, the government had proposed to divest 76 per cent of the airlines. This time around, the government, reportedly, plans to sell 100 per cent stake in AI and AI Express. Additionally, the government has also offered an entire 50 per cent it owns in ground handling joint venture AI-SATS.
In its current proposal, the government has allowed bidding on an enterprise value (EV) basis, said reports, adding that the bidders can now quote an EV based on their estimate of combined value of AI's equity and debt. The bidders will no longer be required to take on the pre-fixed Rs 23,000 crore debt of the airline.
The winning bidders will be decided on who quotes the highest EV and at least 15 per cent of this will be required to be paid in cash and the rest can be taken up on debt.