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The Indian Ministry of Civil Aviation is asking for bids on the state-owned Air India. The government is looking to divest of 76% of the national airline.
The buyer would also acquire Air India subsidiary Air India Limited Express, as well as controlling interest in Air India’s 50% stake of the ground-hauling service Air India SATS.
Air India has struggled in the increasingly competitive India air sector. Domestically, Air India has India’s fourth-largest share of fliers, the company reported in the solicitation. Low-cost carriers IndiGo, Jet Airways and SpiceJet are larger.
On international flights, Air India is the country’s market leader with a 17% share, but faces tough competition from Jet Airways, as well as from the Gulf airlines Emirates and Etihad. Air India flies to five U.S. destinations.
Air India reported profits during the past two fiscal years but remains saddled with substantial debt.
The aviation ministry has set the minimum net worth of bidders for the airline at 5 billion rupees ($767.5 million) and is requiring that bidding companies have been profitable in at least three of the past five fiscal years. However, Indian airlines are exempted from that second provision as long as they bid as part of a consortium in which their share is not greater than 51%.
That exception clause could benefit Jet Airways, which reported that it had a negative net worth in its 2017 financial report. In March, the Times of India reported that a consortium of Jet Airways, Delta and Air France-KLM have expressed an interest in acquiring Air India. Those airlines have not confirmed the report.
Source: travelweekly.com