Air India divestment process gets underway, but no timeframe fixed yet

Our Bureau New Delhi | Updated on September 19, 2019 Published on September 19, 2019

File photo   -  REUTERS

The process of Air India’s divestment is underway with all issues regarding the divestment being taken on board by the Administrative Mechanism of Ministers at its first meeting here on Thursday, Hardeep Puri, Minister for Civil Aviation, said.

“It was a productive meeting. We will take all decisions in a defined period of time. The next meeting will be held soon,” Puri told the media. The meeting was attended by Home Minister Amit Shah and Ministers for Finance, Commerce and Railways, apart from Puri.

Puri declined to get into specifics such as the quantum of Foreign Direct Investment that will be allowed into Air India, the debt the government was willing to transfer to a special purpose vehicle or the timeline for the government to actually kick start the process.

After the Administrative Mechanism gives the all clear, the process of divestment will get underway with the advisor Ernst and Young issuing the Preliminary Information Memorandum which will be the basis on which entities willing to participate in the divestment can put in their bids. The process from beginning to end could take anything from a few months to a year.

The government is keen to divest Air India at the earliest and has already taken several steps to sweeten the deal. This includes parking almost ₹30,000 crore of the airline's debt in a SPV. In addition, the Union Budget talked about looking at hiking FDI in civil aviation which many analysts feel is another way to attract potential bidders to become interested in the national carrier.

The government is yet to specify what exactly it has in mind when divesting Air India. But it is widely expected that the government will be willing to sell its 100 per cent stake in the airline.

Despite the government showing keenness to divest Air India there does not seem to be much enthusiasm among the industry players about picking up a stake in the airline. Several key industrial houses, including the Tatas, have reportedly said that they will not be interested in bidding for the state-owned airline.

Published on September 19, 2019
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