New Delhi: Financial bids for Air India disinvestment are likely to be received by 15 September, Minister of State for Civil Aviation V.K. Singh said in a written reply to Lok Sabha Thursday.
Debt on the national carrier has also come down to Rs 38,367 crore — from nearly Rs 60,000 crore in March 2020, due to transfer of over Rs 22,000 crore to Air India Assets Holding Limited.
However, the Covid-19 pandemic has further weakened the national carrier’s financial condition — it is set to incur a net loss of about Rs 9,779 crore in FY 2020-21 as compared to the net loss of Rs 7,982.83 crore in FY 2019-20.
Underlining its commitment to disinvestment, the reply noted, “The disinvestment of the airline will bring private investment, robust management and faster decision making processes, which will improve the efficiency of the airline and build a viable and vibrant Air India. The interest of the employees of Air India will be safeguarded.”
However, the government provided no equity support to the airline in 2020-21. In comparison, the year equity infusion was Rs 0.01 crore in 2019-2020 and Rs 3,975 crore in 2018-2019.
“In order to effectively prepare Air India for disinvestment, the Government prepared a plan to bring operational and financial efficiency (to) Air India. This plan focuses on improving financial and operational performance of Air India and the parameters and milestones as fixed by the Government are monitored and regularly reviewed,” the reply detailed.
In May this year, Cairn Energy — a British oil company — sued Air India in New York so as to seize its overseas assets to enforce the $1.2 billion arbitration award it won against the Indian government in a retrospective tax dispute. The Indian government has challenged this award in the Netherlands, and it maintains that there will be no likely impact of the lawsuits on the ongoing disinvestment process.
“… Air India Limited is a separate corporate entity with its own management and board. The case is being defended by AIL. The company has appointed lawyers to defend its interests,” the government said in its written reply.
Expression of Interests
Expression of Interests (EOI) for strategic disinvestment of the government’s 100 per cent stake in Air India, Air India Express and 50 per cent stake in Air India SATS was issued on 27 January 2020. The Covid-19 outbreak led to several delays in the last date of submission which finally took place on 14 December 2020.
Several EOIs were received and evaluated by the transaction adviser for the selection of Qualified Interested Bidders (QIB). In March this year, the transaction adviser shared the Request for Proposal (RFP) and draft Share Purchase Agreement (SPA) for submission of the financial bids.
The government first tried selling 76 per cent of its stake in the national carrier in 2018 but received just one bid. Since its merger with domestic operator Indian Airlines in 2007, the national carrier has been facing mounting losses.
According to reports, the Tata Group and SpiceJet’s chairman and managing director Ajay Singh along with his consortium of Ras Al Khaimah Investment Authority and Bird Group’s Ankur Bhatia have emerged as the two bidders.
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