Moneycontrol
Get App
Last Updated : Mar 22, 2018 08:20 AM IST | Source: Moneycontrol.com

Air India group divestment to kick off with EoI of parent airline plus low-cost arm

Group of ministers, looking into the modalities of the Maharaja’s divestment met on Tuesday to discuss the final contours of the EoI.

Dhirendra Tripathi @dtrips

The divestment of Air India group, the largest strategic sale of an Indian public sector company, will happen in phases as the government gets ready to kick off the exercise with that of the parent airline along with Air India Charters, one of its five arms. Divestment process of the parent and its subsidiaries will all have a separate expression of interest (EoI) each and will not be bunched, an official familiar with the development told Moneycontrol.

Air India Charters operates low-cost flights between Kerala and West Asia under the brand name Air India Express. It won’t be merged with its parent company, but the two will be sold as one unit to a single buyer, the official said.

“Besides the parent and two subsidiaries that operate flights, there are three other arms that are all different businesses of varying scale. The business operations of the companies who will be interested in bidding for those subsidiaries will also be different. It won’t be possible to undertake divestment exercise of all at the same time. Hence, all those EoIs will come at different times. The subsidiary businesses are much smaller. Their processes won’t take time,” the official said.

The Specific Alternate Mechanism, a group of ministers, looking into the modalities of the Maharaja’s divestment met on Tuesday to discuss the final contours of the EoI. Finance Minister Arun Jaitley heads the panel that is assisted by consultants EY and SBI Capital Markets.

“A note will be prepared for Cabinet approval for the issue of the EoI. After that, the EoI will be issued. It should be out by the end of this month,” an official said, going with Minister of State for Civil Aviation Jayant Sinha’s statement on March 9 in Hyderabad that the EoI would be out in two to three weeks.

The government is likely to retain 26 per cent stake in Air India to have a board seat and thus have a say in the operations of the loss-making company, the official said.

Besides Air India Charters, Air India counts Air India Air Transport Services, Air India Engineering Services, Airline Allied Services and Hotel Corporation of India as its subsidiaries. It has a 50:50 joint venture - Air India SATS Airport Services - with Singapore Airport Terminal Services to provide ground handling services to airlines at certain metro airports.

The parent and its subsidiaries are provided ground handling services at more than 60 airports by its arm Air India Air Transport Services also. Another arm, Air India Engineering Services, offers maintenance, repair and overhaul services to Air India and its other units besides some other airlines as well.

Airline Allied Services operates regional flights under the brand name Alliance Air.

InterGlobe Aviation, the company behind IndiGo, is the only airline to have officially expressed its interest in buying Air India. Media reports have named Jet Airways as a likely bidder in partnership with Air France and US-based Delta.

In an interesting March 15 interview to foreign news agency Reuters, David Lim, general manager of the India unit of Singapore Airlines, refused to comment on whether the airline would bid for Air India in partnership with Tatas even as he expressed his interest in acquiring stake in the Indian state-owned carrier.

Singapore Airlines and Tatas currently operate the full-service carrier Vistara here. A source had earlier told Moneycontrol that Tata Sons could partner a Japanese airline in bidding for Air India. In response to a Moneycontrol query on whether the business house was in talks with a Japanese airline for the purpose, a company spokesperson had refused to comment, calling the information as “market speculation”.

A senior official with Vistara had on March 17 told Moneycontrol that the airline was focused on growing its business and was not aware of what its shareholders planned to do with respect to bidding for Air India.
First Published on Mar 22, 2018 08:18 am
More From
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant