Govt to sell 76% stake in Air India; cede management control
The government of India unveiled plans to sell up to 76 percent stake in Air India and transfer the management control to private players, starting the ambitious strategic disinvestment process for the debt-laden national carrier. Coming out with a detailed preliminary information memorandum on the stake sale, the Civil Aviation Ministry said the proposed disinvestment would include profit-making Air India Express and joint venture AISATS.
The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd. While the government would retain 24 percent stake in the national carrier, the winning bidder would be required to stay invested in the airline for at least three years. The proposed dilution will ensure transfer of complete management control of the carrier, while allowing foreign airlines or foreign consortium partners to pick up 49% equity in the airline provided that the chairman and at least two-thirds of directors are Indians and effective control vests with Indian nationals. A minimum of 27% equity must remain with Indian entities.
Starting off the disinvestment exercise — a major initiative of the NDA government — Expression of Interest (EoI) has been sought from various entities, including foreign airlines. The last date for submission of EoI is May 14 and intimation to the qualified interest bidders would be made on May 28.
Air India had a fleet of 115 aircraft as of December 2017 and serves around 39 international destinations.
As on December 1, 2017, the airline had 11,214 permanent employees and 2,913 on contract, among others.
Ernst & Young LLP India has been appointed as transaction adviser.
Meanwhile Air India’s employees union has opposed the sale. “We will continue to oppose the privatisation. All these months, neither the government nor the management did talk to us on the issue, though we (employees) are the major stakeholders. It is a completely one-side move,” Air Corporation Employees Union General Secretary J B Kadian told PTI. This union claims to have around 8,000 employees as members.