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76% of Air India’s government stakes to be sold

New Delhi: The government plans to sell 76% stake in Air India, according to the preliminary information memorandum released today on strategic disinvestment of the national carrier.

On 28 June 2017, the Narendra Modi government had announced the privatisation of Air India. A committee was set up to start the process.

On Wednesday, 28 March, the Civil Aviation Ministry has sought an Expression of Interest (EoI) for the stake sale in the loss-making carrier and two of its subsidiaries.

According to the memorandum, the government plans to offload 76% equity share capital of the national carrier as well as transfer the management control.

Management or employees can participate directly in the bidding process or by way of forming a consortium, as per the memorandum.

The last date for expressing interest is 14 May and shortlisted bidders to be intimated on 28 May.

Minimum net worth requirement to bid for Air India set at Rs 50 billion.

Ernst & Young LLP India has been appointed as transaction advisor by GoI for advising and managing the proposed strategic disinvestment of Air India Limited.

The information memorandum said the transaction will involve Air India, its low-cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.

In June 2017, the Cabinet Committee on Economic Affairs (CCEA) gave an in-principle nod to the strategic disinvestment of the airline, which has a debt burden of over Rs 500 billion.
Subsequent to the decision, the Air India Specific Alternative Mechanism (AISAM), headed by Finance Minister Arun Jaitley, was set up to decide on specific issues.

The national carrier is staying on taxpayers’ money under the turnaround plan approved by the previous UPA government in 2012. [Related: Sirf News supports privatisation of Air India]

When Indian Airlines merger happened

Air India sold three Airbus A300 and one Boeing 747-300M in March 2009 for $18.75 million to finance the debt. By March 2011, Air India had accumulated a debt of Rs 42,600 crore and an operating loss of Rs 22,000 crore and was seeking Rs 42,900 crore from the government.

A report by the Comptroller and Auditor General blamed the decision to buy 111 new aircraft and the ill-timed merger with Indian Airlines for the poor financial situation. In August 2011, the invitation to join Star Alliance was suspended as a result of its failure to meet the minimum standards for the membership.

The government pumped Rs 3,200 crore into Air India in March 2012.

Strongly oppose Air India sale: Mamata

Strongly opposing the Centre’s plans to sell 76% stake in Air India, West Bengal Chief Minister Mamata Banerjee today demanded an immediate withdrawal of the order.

According to a preliminary information memorandum released today on strategic disinvestment of the national carrier, the Centre plans to sell 76% stake in the loss-making Air India.

Banerjee said the BJP-led Centre was trying to sell the country. “This Govt must not be allowed to sell our country,” she said.

According to the memorandum, the government plans to offload 76% equity share capital of the national carrier as well as transfer the management control.

The Ministry of Civil Aviation has sought Expression of Interest (EoI) for the stake sale in the loss-making carrier and two of its subsidiaries.

Sirf News Network

By Sirf News Network

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