Air India disinvestment: Govt may allow holding company structure for carrier; won't permit merger with other brands initially

The government has reportedly decided to permit a successful Air India bidder to operate the debt-laden carrier under a holding company and believes the clause will attract more suitors.

According to a report in the Business Standard, a new owner will also be permitted to place its existing airline brands under the holding company.

Representational image. Reuters

Representational image. Reuters

“Suppose a potential suitor has two existing airlines, A and B. It can then incorporate the two brands and Air India under a single holding company. But a merger of Air India with other brands will not be allowed for the first three years,” an unnamed source familiar with the development was quoted as saying by the newspaper

On 20 April, a senior government official said that private equity (PE) and venture capital (VC) funds with adequate net worth and capability can bid for Air India. Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta said the central government isn't "...looking only for an airline to takeover Air India".

"We have given a small carve out for airlines on how domestic airlines will be treated in terms of eligibility in a consortium but otherwise anybody who has net worth and funds can bid for Air India," Gupta said at industry lobby Assocham's 'Annual India Investment Conference'.

"In all these disinvestment exercises also, we have kept them technically neutral, finance is the main criteria and your capability to takeover and run such an asset in financial terms is the main criteria."

The central government has invited expressions of interest to off-load a 76 percent stake in the national carrier, and will cede management control.

On 28 March, the government issued the Preliminary Information Memorandum (PIM) for the strategic divestment of Air India, along with the airline's shares in Air India Express (AIXL) and Air India SATS Airport Services(AISATS).

With inputs from IANS

Updated Date: Apr 23, 2018 13:08 PM

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