The central government considering delaying the sale of Air India and also reducing the amounts of debts to sweeten the deal for potential buyers. In the current financial year, the airline is granted a loan of 1000 crore rupees. And now the deadline for submitting bids on the airline has been further extended by two months.
Delays in deadlines for bids and reduction in the total debt
The last date for submitting bids has been extended multiple times and the current deadline of August 25 has been pushed back to October 30. Enough though, the sale process was initiated towards late January this year, it kept getting delayed after the outbreak of the COVID-19 virus. The economic fallout after the global inactivity because of the pandemic didn’t help either.
A senior government official said in a statement that, “The government is considering reducing the debt of the airline further in order to make it attractive for interested parties, in the current economic scenario affected by the COVID-19 pandemic.” The debt of Air India as on March 31, 2019, was Rs 58, 255 crores. Later in 2019, Rs 29,464 crore of this debt was transferred from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL).
Civil Aviation Minister addressed the sale in the Parliament
Answering a question in Loksabha Civil Aviation Minister Hardeep Singh Puri said, “Air India Limited has been suffering continuous losses. The COVID-19 pandemic, along with its related impact on the aviation industry has further worsened the financial position of the company.” He further elaborated, “Air India has incurred a net loss of about Rs 2,570 crore in the first quarter of 2020-21, as compared to a net loss of Rs 785 crore sustained in the corresponding period a year ago.”
Failed attempts in the past to sell Air India
The government in the year invited bids to a 76 percent stake of Air India. Sadly no bidders showed any interest in the purchase of the airline back then and the government had to pull back its plans for the sake. But now the government has offered to give up 100 percent of the equity stake.
Current offerings of the government
In this year January had restarted its disinvestment processes. This time the government is offering to sell selling 100 percent of its equity in the state-owned airline, along with Air India’s 100 percent shareholding in Air India Express Ltd and an additional 50 percent stake in Air India SATS Airport Services Private Ltd.
It goes without saying that because of the pandemic airline companies all over the world are suffering to survive. Along with that all major Indian corporates that could be seen as potential buyers are hit by the pandemic as well. However, now more than ever, there is a demand amongst customers for long haul travel flights.
With Air India offering non-stop flights from India to North America, Europe, Africa, Australia among other countries there may be some light at the end of the tunnel. Its to be seen which buyers see recognizes this as an opportunity and shows interest in buying Air India.