News
Government carves up Air India to secure sale
January 19th 2018
Government-controlled Air India could finally be sold off in 2018. Read More » In an interview with Bloomberg, India’s minister for civil aviation, Jayant Sinha, said the government plans to split haemorrhaging Air India into four units and offer at least 51% in each for sale.
The minister said Air India and its low-cost subsidiary, Air India Express, would form the core airline business, while three other units – regional subsidiary Alliance Air, MRO operator Air India Engineering Services and ground handler Air India Air Transport Services – would be put on the market separately.
“We are creating the airline and its subsidiaries to have a much more efficient and cleaned up structure that will be available for sale,” Sinha said. “Interested parties would have 60 days from the beginning of February to voice their expressions of interest. Then we will shortlist them and then they can put in a formal bid.”
Air India’s massive debt has stood in the way of selling the airline group. Sinha said this week New Delhi would pass the carrier’s “unsustainable debt”, exceeding US$7.6 billion, “through two filters”.
The ministry will assign all debt linked to airline-related operational assets, including aircraft, hangars and equipment to the four respective units. The remaining debt would be put into a special purpose vehicle.
India’s largest carrier, budget IndiGo Airlines, has gone on record as interested in acquiring Air India’s and Air India Express’ international operations. Vistara also has declared its interest in a partial acquisition. Both parties have made it a condition, however, that New Delhi addresses and solves Air India’s significant debt issues.
Last week, the Indian government eased ownership rules surrounding the national carrier, allowing up to a 49% stake to be held by foreign investors.
