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The Centre has started the process of selling Air India Transport Limited (AITSL), a 100 per cent subsidiary of Air India. The ministerial panel cleared a proposal for the sale of AITSL on Tuesday, as it approved the Expression of Interest and Preliminary Information Memorandum (PIM) for AITSL.
These two documents will provide information about the company to the bidders and are expected to be issued soon.
These documents will help those interested in bidding for AITSL to place their bids and enable the transaction advisor to come up with a short-list of those who qualify in the bidding process.
The government expects to complete the process of selling AITSL by end of March next year. The funds raised from the sale will be used for settling part of Air India’s debt.
AITSL, which was established in 2003, carries out ground handling activities, including passenger handling, ramp handling, security handling and cargo handling for Air India and its associated company AISATS, Bengaluru. Most of its business comes from Air India.
Small window
However, AITSL’s sale may still run into trouble. A cross section of industry that BusinessLine spoke to felt that the short window for completing the sale “is a little ambitious.”
Some industry watchers feel that the 90-120 days window,where the data room will be opened, following which the bidders will submit their bids for the government to evaluate, is a little challenging.
Data room is the place where all the financial information, debts and liabilities, assets and future projections of the company will be made available to short-listed bidders.
Those interested in bidding also want greater clarity on a number of issues such as what happens to AITSL’s Air India business post the divestment of the national carrier and whether AITSL’s new owner will be given a free hand to deal with its current employees.
The minimum price that is set for the asset, and the duration post-divestment for which the new company will get the grandfather rights that AITSL enjoys at present, will also determine interest in participation.
Grandfather rights allows AITSL to carry on the business in perpetuity at various airports around the country.
A section of industry feels that the timing of issuing the tender is not right, as many parts of the world including Europe and America will go into the holiday season by the second week of December. This means that no serious work will be done till early January in these regions.
Interested parties
However, Turkey-based Celebi Aviation Holding and the Bird Group confirmed to BusinessLine that they will bid for AITSL.
"Celebi will definitely look to participate in AITSL’s divestment. We will send a formal Expression of Interest once the PIM is out," said Murali Ramachandran, CEO India, Celebi Aviation Holding, adding that the company had sent an unsolicited bid in August last year for AITSL during Air India’s divestment. He added that a clearer picture about the bid will emerge when the terms and conditions are made public.
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