Govt plans to sell 76% stake in Air India, cede management control

Govt plans to sell 76% stake in Air India, cede management control

Govt plans to sell 76% stake in Air India, cede management control

Budget passenger carrier IndiGo had expressed interest in buying the airline's global operations and its subsidiary Air India Express.

The magnitude of the debt was one of the prime reasons behind the Government disinvesting Air India, once known as the "Maharajah" due to the monopoly it enjoyed.

When bidding in a consortium, a clearly defined lead member needs to hold majority stake in the corporate entity representing the consortium.

El Al claims that when it was privatized back in the 1990s, the Israeli government at the time pledged to "encourage fair and healthy competition" between Israeli airlines and their foreign competitors.

But the proposal, which calls for bids by May 14, is already generating political opposition and the new owners face turning around an airline that has lost money for the past decade. The consortium can be along with a bank, venture capitalist, a financial institution or fund.

AIESL mainly provides maintenance and overhaul of engines while AIATSL is into ground and cargo handling services. Failing that, they ask that Air India flights that overpass Saudi Arabia be banned.

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The further document clarifies that Air India Engineering Service Ltd, AI Air Transport Services, Hotel Corporation of India and Alliance Allied Services Ltd, all subsidiaries of AI, will not be part of the proposed transaction.

As well, the PIM had revealed that a "confirmed selected bidder" will be required to be invested in the airline for at least three years and keep "substantial ownership and effective control" of both Air India and Air India Express vested with Indian nationals. It adds that the Central government is "carving out real-estate assets and other businesses which are not integral to the core airline business into a separate Special Purpose Vehicle (SPV). The value of the (Air India) shares today is not very high", said R.C. Bhargava, former chief executive and current chairman of Maruti Suzuki.

During this period, the bidder would also not be allowed to cede the management control. "The latest move of sale of 76 percent share of Air India to private players is a move in pursuance of the same policy of sell out of national assets in the name of ease of doing business", the statement says.

EY India has been appointed as transaction adviser for the strategic disinvestment process. All these months, neither the government nor the management did talk to us on the issue, though we (employees) are the major stakeholders.

The company was given a general nod by the Union Cabinet in June 2017.

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