MIAMI – As per its sale of flag carrier Air India (AI), the government announced it would not extend the deadline for submitting interest in the purchase. Nonetheless, it has allowed interested parties to submit physical bids until December 14.

Although the announcement represents an obstacle for a future sale, the action does offer one week more for any interested bidders. The Department of Investment and Public Asset Management (DIPAM) stated that the qualified bidders for AI would probably receive the respective notifications by January 5, 2021.

The government made the sale deal adjustment given the uncertainty felt in the aviation environment. The Indian government has been trying to sell AI since 2018.

Just before the pandemic, the Indian state offered bids to promote the sale of its stake in AI and Air India Express (IX). Additionally, it offered a 50% stake in-floor dealing with firm Air India SATS Airport Services. This is an equal three-way partnership between the state, AI and Singapore Airport Terminal Services.

Then in October, several media reported that the government was to extend the deadline beyond the month. The goal of this first extension was to reach better deal terms, according to Finance Minister officials. Now, the strategy is different.

Air India Airbus A330-200. Photo: Konstantin Von Wedelstaedt.

Deal Terms in Percentages

Regarding the terms of the deal, the suitors could bid for AI on its enterprise worth as a full bid quantity. Accordingly, about 15% of the airline’s worth will be given to the government and the remaining 85% will comprise the debt taken by the bidder. According to The Greater India, the smaller percentage will probably be under Air India Assets Holding Ltd (AIAHL).

To make the sale offering more attractive, the government reduced its debt from Rs 62,000 crore to Rs 23,286 crore in early 2020. However, the pandemic worsened AI’s situation. Thus, the airline’s administration expects a loss of Rs 8,000 crore during the current fiscal year.

As the potential eligible bidder for the national carrier, Tata Group seemed to be the suitable one. Tata’s position was stronger in the Summer season, but now the table remains open with the government’s deadline and deal readjustments.

Featured photo: Air India Airbus A320-231. Photo: Alan Lebeda.