Cash-strapped national carrier Air India is finally up for sale and several bidders have shown interest in running the ailing national carrier, a group of Air India employees being the top contenders so far.
‘Bloomberg’ reported that a group of 219 Air India Ltd. employees submitted a bid to purchase 51% of the loss-making state-owned carrier. “The remaining 49% will be held by a financial partner,” said Meenakshi Malik, Air India’s commercial director. Each employee will have to contribute at least 100,000 rupees ($1,360) toward the bid, she said.
“Multiple expressions of interest have been received for strategic disinvestment of Air India. The Transaction will now move to the second stage,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey tweeted on Monday.
Malik as confident the group of employees — a mix of young and experienced hands — can run Air India profitably. “The government has removed a huge part of the debt, so we thought who better than us? We know the airline inside out, we know where the problems are. We’re not bidding to win or lose, we’re doing it because we believe we can run the airline well,” said Malik. She said they have found a financial partner, but did not disclose the entity’s name.
Another bidder is said to be Tata Sons. The Times of India earlier said the Tata Group is “believed to have submitted an expression of interest for the troubled Air India”.
Ironically, it was Tata Sons that established Tata Airlines in 1932, which was later renamed Air India. In 1953, the Tatas exited Air India after nationalisation of the carrier.
Tatas invested in two airlines in 2013, viz. Air Asia in partnership with Malaysia’s Air Asia and Vistara along with Singapore Airlines.
Also read: Bidding for Air India to be done on enterprise value, says Hardeep Singh Puri
Aviation Minister Hardeep Puri has said the national carrier will have to shut down if it is not privatized. “It (AI divestment) is a confidential procedure. The department concerned will comment at the appropriate time,” TOI quoted Puri as saying on Monday.
Puri had in July this year said the disinvestment of Air India is the only option available, as like other airlines, the public sector carrier has already been under strain since pre-COVID days and that the situation had only worsened as the pandemic continues.
“Anyone who is familiar with Air India, including the people who work there, know that besides privatization, we are left with no other option. This is for the simple reason that airlines the world over have been under strain pre-COVID and the pandemic has introduced a new element. The Air India CMD is conducting detailed discussions with all sections of the company, like pilots, engineers, etc,” Puri had said at a press conference.
The AI’s debt-cum-liabilities combined burden is almost ₹90,000 crore.
The government had in January attempted to sweeten the deal for AI privatization after a failed bid in 2018. Apart from reducing the debt of the loss-making airline, the government made many changes in the eligibility criteria for prospective bidders in its attempt to sweeten the deal. For instance, the debt of AI and its low-cost subsidiary has been reduced to around Rs 23,286 crore from Rs 60,000 crore.