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With less than 24 hours remaining for the deadline for potential suitors to put in their bids for Air India coming to an end, the Centre is yet to receive a single bid for the state-owned carrier. The government is, however, clear that there will be no extension to the deadlines which have been set for the divestment of its stake in the Maharaja.
“Experience has shown that bids are received on the last day, in the last hour. This is typical bidding behaviour. Why would anyone like to announce several days before that they are interested in bidding for any entity?” RN Choubey, Civil Aviation Secretary, told newspersons here on Wednesday. He declined to comment on whether any airline has shown interest in participating in the bidding process.
In response to a question on whether the Centre will go in for a re-bid for Air India in case the response is tepid, Chobey said: “The decision rests with the Alternative Mechanism.” The Alternative Mechanism comprises the Ministers for Finance, Civil Aviation and Roads and Highway, among others.
Government officials declined to speculate on whether the Centre will call off the bidding process in case only one bid is put in by 5 pm on Thursday, the cut-off time for entities interested in participating in the Air India bidding process to put in their expressions of interest (EoI).
The Centre is working on being able to identify the parties that qualify to put in financial bids within two weeks of the EoI deadline expiring on Thursday.
Earlier this month, Choubey had told newspersons that the highest bidder for Air India will be identified by August this year and the entire divestment process will be completed by December.
Initially, the Centre had hoped to identify a successful bidder by June 15 and complete the legal formalities for completing the divestment process by December. Government officials declined to get into specifics of how the December deadline could be met despite the time line for identifying the successful bidder being pushed by close to two months.
Revision of offer
The start of the divestment process has already seen the Centre for Asia Pacific Aviation (CAPA) and consultancy KPMG calling on the government to revise the EoI to offer more liberal terms to align it to investor interests if it is keen to sell a stake in Air India.
“As it happens in such complex transactions, being flexible and having an open mind on major issues is necessary. Revising EoI with more liberal terms will be required to further align it to investor interest,” CAPA said in a statement issued earlier, adding that the EoI released was well structured and largely aligned to generating an interest from investors.
“Simplifying the deal structure to attract at least 3-4 serious bidders is in the government’s own interest. And that of the silent Indian taxpayer — the real owner of Air India,” Amber Dubey, partner and India head, aerospace and defence, KPMG, had added.
Key concerns
The Centre has clarified on some of the issues but the key issues which many feel could be a deal breaker — including what is to happen to Air India’s employees and the government retaining a stake in the airline post divestment — are yet to be sorted out.
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