Govt to divest 76 PC in AI, invites EoI

Government wants to sell 76% stake in loss-making Air India transfer management control

Government wants to sell 76% stake in loss-making Air India transfer management control

"It's like the government wants to sell its old vehicle, but still wants to drive it every Sunday", the late Saumitra Chaudhuri, a member of India's erstwhile Planning Commission, once told me.

Even as the Air India has begun its thrice a week service to Tel Aviv in Israel flying over Saudi airspace, the national carrier El Al airline announced that it has approached Supreme Court terming it the deal to be unfair.

On Wednesday, the Civil Aviation Ministry came out with the preliminary information memorandum for seeking Expression of Interest (EoI) for the strategic disinvestment of Air India.

On the debt restructuring, the PIM disclosed that the "existing debt and liabilities of AI and AIXL as on March 31, 2017, are being reallocated and it is expected that debt and liabilities...will remain with AI and AIXL".

"Air India/ Air India Asset Holding Ltd will commit to pay the same at the appropriate stage before consummation of the proposed transaction", it noted.

Department of Investment and Public Asset Management Secretary Neeraj Kumar Gupta said that non-core assets like buildings and others will be transferred to the special goal vehicle.

The non-core assets of Air India, including its iconic building in Mumbai, would not be up for sale. So far, only IndiGo has publicly expressed a desire to acquire Air India.

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Modi's cabinet gave the go-ahead a year ago to sell the loss-making flagship airline after successive governments spent billions of dollars to keep it solvent.

"The selected bidder will be allowed to use the Air India brand for AI business operations for a minimum specified number of years".

"However, if the member of the consortium is a scheduled airline operator in India, the condition to meet positive profit after tax shall not apply to such member provided shareholding of such member is restricted to maximum of 51 per cent of paid up equity share capital of the consortium (special objective vehicle)". Singapore Airlines Ltd and India's Tata Group, which run a joint venture airline named Vistara in India, said they were also open to look at the sale, but haven't elaborated yet.

Almost nine months after the cabinet committee on economic affairs agreed to start the process of disinvestment in Air India, the first set of documents to officially invite suitors for Air India were released by the Ministry of Civil Aviation.

The money that was pumped in Air India earlier would be used for public welfare sectors like healthcare and farmers, Sinha said.

El Al claims that when it was privatized back in the 1990s, the Israeli government at the time pledged to "encourage fair and healthy competition" between Israeli airlines and their foreign competitors. Though the encouraging sign is that Air India's employee cost as a percentage of revenue is only 12%, one of the lowest amongst worldwide airlines like Singapore Airlines (15%), British Airways (21%) and Cathay Pacific (20%).

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