Govt announces plan to sell entire stake in Air India, sets terms for sale

March 17 is deadline for submissions of initial expressions of interest; any bidder would have to agree to assume roughly $3.26 billion in debt.

The government said India said on Monday it plans to sell its entire stake in Air India, in a revised push to sell its national carrier after an initial attempt to sell a majority stake in the airline failed to draw a single bid in 2018.

A document inviting expressions of interest in Air India, released on Monday, said the government would sell a 100 per cent stake in the carrier, which operates both domestic and international routes.

The document set March 17 as the deadline for submissions of initial expressions of interest and said any bidder would have to agree to assume roughly $3.26 billion in debt, along with other liabilities.

The government said that substantial ownership and effective control of Air India would have to remain vested with an Indian entity following the sale, limiting the scope of any foreign bidders interested in the asset.

In 2018, India had tried to sell a 76% stake in Air India and offload about $5.1 billion of its debt, terms that potential buyers at the time viewed as too onerous.

Air India, known for its Maharaja mascot, has some of India's most lucrative international and domestic landing and parking slots that are key for airlines.

BS

Air India unions may demand VRS in meeting with Hardeep Singh Puri today

The government is planning to float Expression of Interest (EoI) for selling its entire 100 per cent stake in the loss-making flag carrier some time next week.

Company News : Air India trade unions are likely to demand a VRS package at their second meeting with Minister of State for Civil Aviation Hardeep Singh Puri in New Delhi on Monday.

The minister is set to meet over a dozen Air India unions, including unrecognised ones, on Monday for the second time in a month over the airline's privatisation plans.

The government is planning to float Expression of Interest (EoI) for selling its entire 100 per cent stake in the loss-making flag carrier some time next week.

At the first meeting on January 2, the minister had made it clear that privatisation was the only option before the government to keep the airline afloat and sought employees cooperation in carrying out the disinvestment process.

Puri had also told the unions that he will call them again after the meeting of the ministerial panel on Air India disinvestment.

"Initially, we were told that government would protect our jobs if airline gets privatised and therefore we did not think about voluntary retirement.

"But off late, our members have been approaching us and want us to discuss a voluntary retirement scheme package with the government as it is expected that our job will be protected only for one year post privatisation. We are going to raise this issue at the meeting with the minister on Monday," an airline source told PTI.

The source said that if the government agrees "in-principle" on their demand, the unions will work out the contours of the VRS package, including the service cut-off period and the quantum of monetary compensation.

Media reports suggest that the new investor may be allowed to retain Air India's some 11,000 employees only for one year after the carrier goes into private hands.

The Group of Ministers (GoM) led by Union Home Minister Amit Shah during its meeting on January 7 approved the plan to invite EoI and the sale-purchase agreement for the disinvestment of state-run carrier, an official had earlier said.

Air India's net loss in 2018-19 was around Rs 8,556 crore. Moreover, its per day losses are estimated to be in the range of Rs 20-26 crore, alongwith a debt of around Rs 80,000 crore.

Air India may not be able to sustain operations, CMD Lohani tells Centre

Air India is seeking government approval to raise a Rs 2,000-crore loan and refinance $819-million aircraft debt, which would help tide over the financial crisis.

BS : Air India Chairman Ashwani Lohani has warned of flight disruptions and possible invocation of government guarantee because of delays in fundraising and refinance of aircraft debt. Air India is facing a cash squeeze due to lack of fund infusion and monthly shortfall of Rs 220 crore in operations.

It has led to the airline defaulting on statutory payments and caused delays in payment to vendors and service providers as well.

Air India is seeking government approval to raise a Rs 2,000-crore loan and refinance $819-million aircraft debt, which would help tide over the financial crisis. “The overall financial situation of the airline is grossly untenable and it may not be able to sustain physical operations in the absence of immediate government intervention and support,” Lohani wrote to the civil aviation ministry last week while seeking nod for refinance of loan and fresh loan guarantees.

Air India received an offer from a consortium of four banks to refinance the $819 million bridge loan taken for acquiring six Boeing 787 and one Boeing 777 aircraft.

The government guarantee in respect to the bridge loan will expire on December 27 and the airline has sought government nod to refinance it before end of the month. “In case the current bridge financing loans of $819 million are not paid off, the lenders may call on the central guarantee in the next one week as they have to take action 15 days prior to the expiry of the guarantee,” Lohani said in his letter.

A civil aviation ministry official said Air India’s proposals for loan guarantee and loan refinancing have been forwarded to the finance ministry for approval. Air India made a loss of Rs 8,556 crore in the last financial year. The airline continues to bleed in the current fiscal despite increase in revenue and yields. New domestic and international flights, too, have been launched but delay in fund infusion has also resulted in continued grounding of 12 Airbus planes.

Last Saturday, Lohani also took to the social media to highlight difficulties in running the airline and make a fresh plea for funds.

In a Facebook post, Lohani had said the airline needs to survive before it is sold.

The government is looking to sell 100 per cent stake in Air India and is expected to issue expressions of interest next month.