Air India: No taker for Air India stake sale as bids close without a single offer
The government’s bid to sell off loss-ridden Air India has come a cropper with not a single entity showing interest in the national carrier till Thursday, the last day for doing so.
“As informed by the transaction adviser, no response has been received for the expression of interest (EoI) floated for the strategic disinvestment of AI. Further course of action will be decided appropriately,” the aviation ministry tweeted after 5 pm, the deadline for submissions.
Civil aviation minister Suresh Prabhu and his deputy Jayant Sinha opted to stay quiet on the failed attempt to sell the cash-guzzler even as they were busy tweeting about a pick-up in the economy.
Aviation secretary R N Choubey, who had on Wednesday expressed hope that bids would come even at the last hour, said on Thursday the government had expected better response.
“It did not meet the expectations of participation that we had. Inputs will be taken from the transaction adviser on what went wrong and the plan is to reach the alternate mechanism (AI GoM) for solutions within a couple of weeks,” Choubey said, without commenting on whether AI privatisation will happen in the remaining tenure of this government.
“We would not want AI to lose market share and may discuss allowing the carrier to continue with their expansion plans in the interim (getting more planes and adding routes, which were put on hold due to the planned divestment),” Choubey said, indicating government will move swiftly in dealing with the problem child.
Airline executives, consultants and even government officials listed a number of issues that the government will need to resolve to ensure that the Maharaja gets a taker. Otherwise, no “bakra”— as former aviation minister A G Raju had said — will be found for the airline.
The key issues troubling investors are — fate of AI’s 27,000-strong workforce; Rs 50,000-crore debt-cum-losses; government offering 76% in the airline and retaining the balance. The bidder was expected to take on Rs 33,392 crore of this debt under the terms of sale that had no takers.
Now, with senior government officials admitting that the terms of sale will need to be tweaked if AI has to be privatised, there is little chance of that happening in the remaining term of this administration — which is being seen as a major setback to the most ambitious disinvestment taken up by PM Narendra Modi. A government official said that offering the entire equity would be a wiser option as private players want no government intervention.
“A big sell-off like Air India cannot happen in the last few months of a government’s tenure. Anyone expecting to put thousands of crores will be worried about how the deal will be viewed in case of a change in administration after the polls. As it is, taking on AI means acquiring huge issues and you do not want CBI, CVC and CAG running down your neck later on if the party selling AI does not return to power,” said a source.
A corporate entity, which had the first meeting with EY on AI sale, had raised the issue of elections being too close.
A group of ministers from finance, aviation and other ministries will prepare recommendation for FM -headed GoM, which will take the final call on what needs to be done for AI till the polls. EY will give its report to the government on the issues troubling potential investors, which need to be changed, if AI has to be sold.
The unions, which have been opposing the sale of Air India are rejoicing. “No bids at the end of the day. Victory for Joint Forum in our endeavour of save AI,” a leader said.