Forbes India 15th Anniversary Special

Air India sale slow to take off

Terms imposed by the government prove to be a roadblock

Manu Balachandran
Published: Apr 23, 2018 12:30:53 PM IST
Updated: Apr 23, 2018 12:35:38 PM IST

Air India sale slow to take offImage: Sattish Bate / Hindustan Times via Getty Images 

The government in April began proceedings to sell 76 percent stake in the country’s debt-laden national carrier, Air India. It sought a formal expression of interest from private companies in buying the 87-year-old airline that is saddled with a ₹50,000 crore-plus debt. However, despite the early enthusiasm, the sale seems to be hitting a roadblock. So far, the country’s biggest (IndiGo) and second-biggest airline (Jet Airways) by market share have withdrawn from the race.  

Much of the roadblock seems to have stemmed from the conditions of the sale document, which mentions that the government would retain 24 percent stake and the winning bidder would be required to stay invested in the airline for at least three years. The buyer cannot merge it with existing businesses as long as the government holds a stake; it will also be required to list Air India. Also, the government wants the winning bidder to take over 61 percent of the debt.

Air India sale slow to take off
Besides, potential bidders must have a net worth of ₹5,000 crore. Currently only IndiGo meets that requirement. Despite this, at least four international carriers—British Airways, Lufthansa, Etihad and Singapore Airlines (SIA)—have shown interest in the stake sale.

 

(This story appears in the 11 May, 2018 issue of Forbes India. To visit our Archives, click here.)