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Thu 24 Oct 2019 01:35 PM

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Indian gov't to seek investors for Air India privatisation next month

Tata Group and some foreign airlines are said to have plans to bid for Air India

Indian gov't to seek investors for Air India privatisation next month

The Air India management had also convened a meeting with representatives of all the unions of the carrier early last week to discuss the privatisation issue.


Expression of interest (EoI) for privatisation of India’s national carrier Air India is expected to be issued by the first week of November, according to official sources in the carrier.

The Group of Ministers (GoM) formed by the Indian government to deal with the privatization of Air India is likely to meet next week to firm up the schedule for the disinvestment of government stake in the carrier.

“We are given to understand that invitations for EoIs for government stake divestment in Air India is expected to be issued by the first week of November,” President of one of Air India unions told Arabian Business. He did not want to be identified as there is a gag order on the AI union leaders and senior officials to talk to media on the pravatisation issue.

When contacted, Air India spokesperson Dhananjay Kumar also told Arabian Business that “we are not authorized to speak on disinvestment issues”.

India’s Tata group and some of the foreign airlines are said to have plans to bid for Air India.

Prior to the GoM meeting, the federal civil aviation ministry convened a meeting last Friday on the Air India disinvestment plans, in which issues such as selling the carrier and its subsidiaries, including Air India Express, separately and parting with the carrier’s Maharaja logo to the prospective buyer were understood to have been discussed.

The Air India management had also convened a meeting with representatives of all the unions of the carrier early last week to discuss the privatisation issue.

“The AI (Air India) management was talking of job security to employees only for a year post privatisation. We were told that most of the existing provisions such as leave encashment, medical facilities, free and discounted travel facilities will be discontinued post privatisation,” the Air India union leader, who attended the meeting, has said.

“Even our provident fund (PF), which is currently managed by a Trust, will be transferred to the Employees’ Provident Fund Organisation (EPFO), the government body which manages PFs of companies in India. This will mean the employees will stand to lose the extra return the Trust used to earn on our PF amounts,” the union leader added.

Air India union leaders told Arabian Business that they will finalise their future course of action aganst the privatisation move only after the government invites EoIs for divesting its stake.

“As of now there is no official procedure on the proposed privatisation. EoI invites will be the first official step in this and we will decide our action plan once EoIs are invited,” a union leader said.

In order to make Air India attractive to prospective buyers, Indian government has set up a separate body - Air India Asset Holdings Ltd (AIAHL) – to transfer a major chunk of the national carrier’s liabilities, estimated at about $8.18 billion.

Government has already raised $3.1 billion through bond issues, and along with transfer of about $1.05 billion of local bonds to the account of AIAHL, nearly half of Air India’s debt has already been taken out from its books.

The 89-year-old Air India, originally set up by Tata group founder JRD Tata in 1930 and was nationalised post Independence, posted a loss of approximately $817 million on a consolidated revenue of $3.8 billion in FY 18.

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