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

Air India Maharaja on the auction block as govt invites Expression of Interest to sell 76% stake

Air India Maharaja on the auction block as govt invites Expression of Interest to sell 76% stake

Disinvestment-bound Air India has more than 6,200 slots for domestic and worldwide flights, which could be among the key attractions for potential bidders, according to an official document.

The government is planning to create an employee stock ownership plan (ESOP) from its own stake in Air India (AI), Minister of State for Civil Aviation Jayant Sinha said in an interview to CNBC TV18.

"Permanent employees will be given stock option in the company, it will be given from the residual stake the government will hold in Air India", a senior government official told the daily, adding that employees opting for the plan will be able to monetise the stock when the airline is listed in the stock market. The funds saved can help the government bolster its finances and boost spending on health and education.

Mark Martin, CEO, Martin Consulting, feels strategically Air India makes an outstanding secret weapon for any legacy European airline which has a bone to pick with the Gulf carriers.

Attractive slots at capacity-constrained airports and opportunities to increase global market share are among the highlights of Air India and Air India Express, as per the preliminary information memorandum issued on Wednesday for the proposed divestment. The government has injected $3.6 billion (Rs 23,461 crore at $1 = Rs 65.17) since 2012 to bail out the airline. The existing debt and liabilities of Air India and Air India Express as on March 31, 2017 would be re-allocated. "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. Its low-priced airline, Scoot, operates 46 flights to India. The latest offer will include Rs 333 billion ($5.1 billion) of debt that the buyer will have to take over with the balance going to the government. The majority of the members, in favour of selling the government's stake in the national carrier, were from the ruling BJP.

However, Indigo's state-owned rival has a 16.9 percent share of the global travel market in India. "The passengers were offloaded to carry out the security drills", Deputy Commissioner of Police Sanjay Bhatia said.

As tempting a proposition it is to own this 85-year old airline which was started JRD Tata, the risks associated with its purchase are equally high.

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