New Delhi: Moving forward with Air India stake sale process for the second time in less than two years, the central government on Monday issued the preliminary bid document for 100 per cent stake in the debt-laden airline along with fixing the debt amount for prospective bidders and easing the bidding norms.
As part of the ambitious strategic disinvestment, Air India would sell its cent per cent stake in profit-making budget carrier Air India Express as well as 50 per cent shareholding in equal joint venture Air India SATS Airport Services (AISATS). All the three entities would be sold together and management control of the national carrier would be transferred to the new investor.
In a significant move, the successful bidder would have to take only a debt of Rs 23,286.5 crore while the liabilities would be decided depending on current assets at the time of closing of the transaction, according to the preliminary information memorandum issued on Monday.
The rest of the amount of the total Rs 60,074-crore debt as on March 31, 2019, would be transferred to Air India Assets Holding Ltd, the special purpose vehicle.
Staff dues of about Rs 1,383.70 crore on account of Justice Dharmadhikari Commission’s recommendation on past arrears would be paid by the government.
The new investor would continue to use the ‘Air India’ brand. The deadline for submitting the bids is March 17.
The government has relaxed the bidding norms wherein networth for potential bidders fixed at Rs 3,500 crore and minimum stake for an individual consortium partner lowered to 10 per cent. The networth criteria was Rs 5,000 crore in the 2018 bid document.
Another key change is that an entity can put in a bid on the “strength of its parent”, which means that an entity floated by a big corporate could participate in the disinvestment process, the person in the know of the PIM details said.
Further, a domestic carrier with zero or negative networth can own up to 51 per cent stake provided the networth requirement is fulfilled by the consortium partner.
Briefing reporters, Minister of State for Civil Aviation Hardeep Singh Puri said the reason for privatisation of Air India is that the government has resources which are scarce.
According to the civil aviation ministry, there are a total of 17,984 employees at Air India and Air India Express. These include 9,617 permanent employees. The count also takes into account those on deputation at the airline.
Excluding those on deputation, the total count would a little over 16,000 people.
There was no immediate comments from Air India unions on the bid document.
The minister made it clear that all land and building assets, including painting, arts and artefacts would not be part of the transaction.
However, certain land and buildings at Delhi, Mumbai airports and corporate offices which are core assets for running the airline will be given to the new investor on a right to use basis for a limited period, he noted.
“Contingent liabilities related to statutory dues and government dues will be indeminified by the government. Contingent liabilities due for retired employees will be clarified at the RFP (request for proposal) stage… Corporate guarantees given by Air India on behalf of Alliance Air will not be passed on the new investor,” Puri said.
This is at least the third time that the government is attempting disinvestment of Air India, which has been in the red since merger with Air India Express in 2007. The first attempt for stake sale, when Air India and Indian Airlines were separate entities, was done in 2001-2002 period when the NDA government was in power.
Permanent staff would be offered around three per cent or 98 crore shares of the airline under the Employee Stock Option Programme.