IndiGo and Etihad Airways have evinced interest in bidding for the beleaguered national carrier Air India. The debt-laden airline's entire stake has been put on sale by the government under the proposed disinvestment process.
"Representatives from these companies have met government officials and, unofficially, shown interest in the national carrier. The Tata Group, however, has not shown any interest yet," a source told The Economic Times.
Where IndiGo can bid for a 100% stake in Air India, Etihad can own only 49%, according to the current foreign direct investment (FDI) rules.
These norms allow a foreign airline to own up to 49% in an Indian carrier but permit 100% foreign investment in an airline. Hence, Etihad can own a 100% stake in Air India by tying up with either National Investment and Infrastructure Fund (NIIF) or Abu Dhabi Investment Authority (ADIA).
The NIIF is an infrastructure investment company backed by the Indian government. It was established to ensure long-term capital to the country's infrastructure sector.
Air India had recently conducted investment roadshows in Singapore and London to attract prospective buyers which received a lukewarm response.
Meanwhile, a couple of private equity investors have also shown their interest in bidding for the ailing national carrier.
"There are these two companies and a couple of private equity investors who have shown some interest. An airline as big as Air India is unlikely to receive any more interest," an official told the news daily.
This will be the Modi regime's second attempt to put its entire stake in Air India on sale. The dispensation in its first attempt in 2018 had planned to retain a 24% stake in Air India.
The government is planning to issue the expression of interest (EoI) in January 2020 after the holiday season ends to make sure the foreign buyers participate more actively in the national carrier's stake sale process.