The government may not sell Air India if it doesn't get 'adequate' price for it, Civil Aviation Secretary R N Choubey said on Tuesday. The secretary said that the 'government has the right to sell or not to sell Air India if the bid price is found to be inadequate.' However, he believes that debt-ridden national airline will fetch a good price. In a recent report, SBI Caps valued Air India at USD 2.5 billion.
This year in March, the government invited Expressions of Interest or EoI for sale of 76 per cent stake in Air India as well as the transfer of management control. The deadline for submission of EoI ends on May 31.
The Aviation Secretary said that the Request for Proposal could be issued after June 15. He further said that the highest bidder for the airline would be known by the end of August. But the highest bidder may not be the successful bidder, the secretary added.
The government has appointed global consulting and management firm Ernst & Young as its transaction advisor for advising and managing the proposed strategic disinvestment of state-run airline. "Though the transaction advisor (Ernst & Young) will assess the enterprise value, the right price for the airline will be decided by us," Aviation Secretary Choubey said.
Initially, many national and international players had shown their interest in buying Air India. But after the government came out with EoI, some of them backed out, citing unworkable terms and conditions.
The government has bundled a 76 per cent stake in Air India (international operations) and Air India Express (low cost carrier) with 50 per cent of its stake in Air India Sats Airport Services (AISATS). There is hardly any domestic company interested in meeting this condition.
Foreign players such as International Airlines Group or IAG (owners of British Airways), Singapore Airlines, Lufthansa, Etihad had shown interest. But, they would require local partners to strike the deal. Due to this, some of the foreign players have already backed out.
Indian players are wary too. The country's largest airline Indigo recently pulled out as it was not keen to take over the domestic operations of Air India. The compulsion of taking over 50 per cent of AISATS is keeping Jet Airways away.
The Tata Group, which has interests in Vistara and Air Asia's India operations, opted out because of three conditions --merger with existing airline, job security of existing staff and ownership of debt.