In its desperate efforts to boost the prospects of Air India sale, the government may further extend the date for submission of bids beyond October 30, while also sweetening the deal terms further, as reported by our very reliable sources in the Union Finance Ministry.
The submission of initial bid or expression of interest (EoI) may be extended by 45 days to two months. Also, buyers will decide on the level of debt that they will take and the one taking the largest debt may be considered favourable to be declared the winner.
As per the Air India EoI floated by Department of Investment and Public Asset Management (DIPAM) in January, of the airline’s total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
For the government, Air India has now become a test case on how to get investor interest in adversarial market conditions. With the airlines financials already under severe pressure, the government is finding it tough to get investors on board.
Air India has been been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines Ltd., and since then is flying on government budgetary support adding pressure to central resources.
Air India disinvestment is a key component of this year sell target of Rs 2.1 lakh crore. The government has so far mobilised a meager Rs 5,500 crore from disinvestment.
