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State run Air India (AI), which has debt of over Rs 50,000 crore, will not be sold as a single unit, sources close to the development said.
Sources, who did not wish to be identified, said that each business of AI will be put out for sale as an “independent” unit, free from the overall debt.
The public carrier's finances have been bleeding after its merger with Indian Airlines in 2007 brought more loses than anticipated profits.
The government had set up a ministerial committee, headed by finance minister Arun Jaitley, to suggest ways for divesting the airline. After the Union cabinet gave “in-principle” approval for the divestment process, companies such as IndiGo (India's largest private sector airline), the Bird group and Tata Sons “showed interest” in purchasing separate businesses of AI.
Also read: Stiff norms, big names at Air India divestment transaction advisor pre-bid meet
While IndiGo wants to leverage on Air India’s “international” business, Tata Sons's group preferred to take back the airlines it began in 1930s.
Sources said that despite mounting debt, AI had “enough buyers” due to its “strong foundation”.
The date for finalising the divestment process has not been fixed, said the sources, adding that the public carrier would be sold to “domestic buyers” with individual, profit generating, business arms.
The government has already invited bids for appointment of legal and financial advisors to take the process forward, while asset valuation of AI began in September.
AI’s five subsidiaries include Air India Express Limited (AIEL), Air India Air Transport Service Limited (AIATSL), Air India Engineering Services Limited (AIESL), Airline Allied Service Ltd (AASL) and Hotel Corporation of India (HCI). It also has a joint-venture with Singapore Air Transport Services (SATS) called AISATS.
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