Air India sale: No takers for Maharaja as the deadline for bids ends

In a big setback to Prime Minister Narendra Modi's ambitious plan to privatise Air India, the government -- after several months of negotiation and planning -- on Thursday said it didn't find any takers for the Maharaja of India. In a statement, the Centre said no bids were received for Air India's strategic disinvestment as the deadline for the submission of Expression of Interest (EOI) ended on Thursday.

"As informed by the Transaction Adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India. Further course of action will be decided appropriately," the Civil Aviation Ministry said in a tweet.

As informed by the Transaction Adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India. Further course of action will be decided appropriately.

- Ministry of Civil Aviation (@MoCA_GoI) May 31, 2018

The government plans to sell 76 per cent stake in Air India, 100 per cent in its subsidiary Air India Express, and 50 per cent in its ground handling staff. Apart from that, the prospective buyer is supposed to pare half of its total debt of Rs 54,000 crore. Three airlines, IndiGo, Tata Sons, and Jet Airways, had initially showed some interest but they also backed out citing unsuitable terms of conditions put forward by the Centre.

Analysts suggest no airline would come forward to buy the carrier if the Centre insists on retaining 26 per cent stake in Air India. A poor response to Air India divestment also means the Centre might face similar hurdles in selling other state-owned companies too.

The government had extended the deadline for submitting EOI for Air India on May 1 to May 31. Before that, it set May 14 as the deadline to submit EOI. As all three national carriers that earlier showed interest raised reasons like terms of reference, liabilities, stake issues, etc, for backing off from the sale process, the government has extended the deadline.

On May 1, the government clarified its stand on over 160 queries it received from the interested bidders over the disinvestment of Air India and its subsidiaries. The national carrier's assets as well as routes on which it flies make it a lucrative option, but with it also comes the baggage of huge debt burden and liabilities.

However, the government didn't change the basic terms of the sale offer, according to which the Centre wants the bidder (a single company or consortium) to pick up only 76 per cent of the stake in Air India. The successful bidder will also need to take on about Rs 33,392 crore of debt and retain the airline staff for a year.