Never been as confident about Air India divestment as now, says Aviation Minister Hardeep Singh Puri

The government is confident about Air India’s divestment plans, said Civil Aviation Minister Hardeep Singh Puri.

Answering a question at the end of a press conference to update on the ministry’s Vande Bharat mission, Puri said: “I have never been as hopeful and confident on Air India divestment, as I am now.”

Listing out all that he considers the airliner attributes, Puri stated: “I think the true worth of Air India—I have always said it is a first rate asset, excellent engineers, excellent pilots, it has routes, it has wide bodied aircraft, it flies to 40-50 destinations outside (international destinations), and now during Vande Bharat it has flown to even more destinations outside – Air India has added 20 destinations – for evacuation, not civil aviation. Whether evacuating from Wuhan or other things, Air India has been at the heart of this.”

He added that the coronavirus pandemic has given them time to plan. “We will need to take some decisions on rationalisation, etc., but time is a great teacher. So, we may have lost two or three months because of the pandemic, but we have gained a lot of experience in terms of the value and how to take this forward.”

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The Government of India (GoI) had on January 27 announced that it will completely exit Air India, including in units Air India Express (AIXL) and Air India SATS (AISATS), in what was seen a major step to ensure success in its second attempt at divesting the national carrier.

"The GoI has given an ‘in-principle’ approval for the strategic disinvestment of Air India by way of transfer of management control and sale of 100 percent equity share capital of AI held by GoI, which will include AI’s shareholding interest of 100 percent in AIXL and 50 percent in AISATS," the expression of interest (EoI) document released on January 27 stated.

The government has appointed EY to advise and manage the proposed transaction. The last date to submit the EoI was March 17, and the government will intimate the qualified bidders by March 31.

A successful sale of Air India is imperative for the government to meet its disinvestment target. Moreover, the airline, which is dependent on government largesse to run its operations, needs a new owner to keep flying. Its earlier attempt in 2018, when the government had offered to sell 76 percent stake, had come a cropper.

Suitors

The Tata Group has a natural interest in Air India, which started off as Tata Air Services in 1932. In recent interviews, Tata Sons Chairman N Chandrasekaran has not ruled out of the option of the group considering a possible bid for Air India.

The Group already has interests in aviation through two joint ventures in Vistara and AirAsia India.

Other names that have come up include IndiGo, the Hinduja Group - which made a brief appearance in the Jet Airways insolvency, and SpiceJet.

While some of these airlines may look too small to bid, they could form a consortium with PE investors or sovereign funds.

Air India may see suitors from overseas too, though some of them, including Qatar Airways, have ruled out that option.