Air India sale: Centre to ‘removing constraints’ for smooth takeoff of deal

The Centre has said it will ‘remove constraints’ for investors in the sale of Air India Ltd and is also likely to be extended the bid date beyond October 30.

According to Disinvestment Secretary Tuhin Kanta Pandey, the government is considering allowing potential buyers to decide how much of Air India’s debt they want to take on as part of the deal.

As per the current condition, the winning bidder will have to take on $3.3 billion of aircraft debt.

“We will remove the constraints that the current structure of the transaction poses for investors. We are now thinking of letting the market determine the level of debt. That means we don’t freeze it,” Pandey told Bloomberg in an interview.

He added that the bid date is also likely to be extended beyond October 30.

Pandey said winding up Air India could be “disastrous” and only option was disinvestment. “It is very difficult for the government to keep on sustaining Air India. Winding up could be disastrous. The only course now is to proceed towards disinvestment.”

Since 2007, Air India hasn’t made money. It has been hurt by the COVID-19 pandemic, forcing the government to keep extending the date to bid. The offer, announced in January, was sweetened to pass on only the debt related to plane purchases to the new owner.

The airline had $8.4 billion in total debt at the end of March, 2019 and posted a loss of $1.2 billion that year – the highest ever.

At least two previous attempts to sell the airline — once about two decades ago and another in 2018 — have failed. In 2001, Singapore Airlines Ltd. dropped its bid for a stake in Air India, citing political opposition as one of the reasons. It was seeking a 40% stake with India’s Tata Group.