IndiGo, Etihad possible contenders for take-over of Air India

IndiGo and Abu Dhabi-based Etihad Airways have met with government officials to express their interest in taking over the reins of Air India. The representatives from both these airlines have met with concerned government officials unofficially in this regard, as reported by sources.

The government is offering a 100% stake this time, which comes after it was unable to sell 76% stake the previous year.

IndiGo can bid to own 100% in Air India but Etihad can own only 49% under the current foreign direct investment (FDI) norms, that allow a foreign carrier to own up to 49% in an Indian airline, but a full 100% foreign investment in an airline. This means, to bid for a 100% stake, Etihad can either tie-up with Abu Dhabi Investment Authority (ADIA) or National Investment and Infrastructure Fund.

In a bid to lure buyers, the government has offered various relaxations this time, such as a 100% stake in the airline, substantial restructuring of debt and liabilities and allowing the new owner to offer Voluntary Retirement Scheme to employees.

According to the approved plan, Air India will be offered along with low-cost international subsidiary Air India Express as well as its 50% stake in ground-handling company Air India Singapore Airport Terminal Services.

The only way forward is for Air India’s privatization: Civil Aviation Minister

Civil Aviation Minister Hardeep Singh Puri on Monday had assured that the privatization efforts for Air India were on track and taking off quite well, despite reports that the airlines may have to be shut down by June.

When questioned about the possibility of the closure of the airlines, Puri said that “the only way forward is for Air India’s privatization”.

A senior official had said that there is also a dire need for funds to restart operations of 12 grounded narrow-body planes, keeping in mind that the airline has a debt burden of around ₹60,000 crores and the government is still working on the modalities for the disinvestment.

The Press Trust of India had stated in a report, by quoting an unnamed senior airline official, how Air India might be forced to shut down by June next year if they are unable to find a buyer. The “piecemeal” arrangements were difficult to be sustained over a period of time, it was quoted.

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