Air India sale: It's complicated, but need of the hour

The Government of India has put Air India on the block. The government is seeking approximately Rs 15,000 crore from the sale of Air India, its subsidiary Air India Express and AISATS - a 50:50 joint venture partnership between Air India and Singapore Airport Terminal Services (SATS) Limited.

There are three stages of the strategic disinvestment process - Expression of Interest (EoI), due diligence and Share Purchase Agreement (SPA), Request for Proposal (RFP) and then closing of the transaction. As per the eligibility criteria set by transaction advisor Ernst & Young LLP, which is currently assessing the EoIs from potential parties, a bidder should have a net worth of Rs 3,500 crore.

The Preliminary Information Memorandum inviting Expression of Interest for strategic disinvestment of 100 per cent of government of India's stake in the national carrier, was issued on 27 January 2020. The final deadline for submitting expressions of interest by potential bidders, after a few extensions due to Covid restrictions, was 14 December 2020. On 5 January, 2021, the Department of Investment and Public Asset Management was to have finally intimated the qualified interested bidders for further course of action. The deadline for submitting EOIs was extended for the fifth time to December 14, 2020.

The BJP government failed in the first attempt in 2018 when no bidders showed interest in the disinvestment of the airline. The government now plans to wrap up the disinvestment process in the second half of 2021. The lack of clarity on debt, assets complicates Air India sale.

Several names have done the rounds including Tata Sons, New York-based Interups Inc and a consortium of Air India employees, as having expressed interest in buying Air India. But there has been no official confirmation of the same. Pawan Ruia, chairman of Ruia Group has submitted an EoI (expressions of interest) to buy a 100 per cent stake in the embattled national carrier. The central government will start the financial bidding process for Air India's disinvestment from April, those in the fray are yet to get clarity on the quantum of debt and assets, which will be part of the takeover. Another worry is the conditions the government will assert regarding payment schedule and people.

Recently, Air India Employees Consortium, which submitted EoI, was disqualified from the divestment process by the transaction advisor to the government, EY. Tata Group and SpiceJet promoter Ajay Singh are among the few left in the fray now. The revised proposal is that the airline will be sold to those who take over the bigger debt burden. Air India had a total debt of Rs 60,074 crore as of March 2019, but it would have gone up substantially during the period affected by Covid-19 restrictions. Anyway, Air India sale is complicated, but it's need of the hour.