Air India
Air India
File pic

After the failure of India's most ambitious privatisation effort in 2018 -- when the offer of 76% stake in Air India did not elicit a single bid -- the government on Monday announced sale of 100% stake in the debt-laden national carrier.

The government has this time sweetened the offer. For instance, the bidder's minimum net worth has to be Rs 3,500 crore, instead of Rs 5,000 crore proposed in 2018.The earlier condition that the bidder should have been profitable in at least three of the previous five years too has been scrapped. According to aviation experts, this time the government is willing to go the extra mile to accommodate the buyer.

Likewise, a debt of Rs 23,286.5 crore would remain with Air India and Air India Express at the time of closing of the disinvestment. In 2018, the buyer was supposed to take on a debt of Rs 33,392 crore.

Unlike last time, the management control of the airline would also be transferred to the successful bidder.The bid document has been put on the ministry’s website

The disinvestment offer, again on much easier terms, includes 100% sale in low-cost Air India Express and 50% shareholding in joint ground handling venture AISATS.

The deadline for submitting expression of interest is March 17.

Union Civil Aviation Minister Hardeep Singh Puri also announced that Air India will clear employee salary dues and arrears before closing the deal.

The successful bidder, in turn, will have to ensure 3% of the equity shares for permanent employees as stock option (ESOP). Air India also has interests in Air India Engineering Services, Air India Air Transport Services, Airline Allied Services and Hotel Corporation of India.

These entities are in the process of being transferred to a separate company -- Air India Assets Holding Ltd (AIAHL) -- and would not be a part of the proposed transaction.The sweetened deal offered includes sale and leaseback of 82 aircraft owned by Air India and Air India Express that will not only generate cash flow but also give the fleet flexibility.

Air India's revenue had increased year after year but it still showed a net loss, forcing the government to dispose of the national carrier. Its revenue rose from Rs 19802 crore in 2015 to Rs 20,211 crore in 2016, Rs 21,827 crore in 2017, Rs 22,948 crore in 2018 and Rs 25,509 crore in 2019 while the losses in the respective years were Rs 5860 crore, Rs 3837 crore, Rs 6453 crore, Rs 5348 crore and Rs 8556 crore.In contrast, Air India Express remained profitable even as its profits as lease rentals and employees rose 33% and 22% year on year in 2018-19. Air India SATS' profit also fell in 2019 as its other expenses rose 14% and interest cost jumped 42%.

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