Minutes after the 5 p.m. deadline for Air India’s Expression of Interest (EOI) floated by the Government of India for the airlines strategic disinvestment ended on Monday, official sources indicated a favourable response.
Air India’s Strategic Disinvestment
Without venturing into the specifics, Secretary, Department of Investment and Public Asset Management (DIPAM) put out a Tweet and said that multiple Expressions of Interest have been received for strategic disinvestment of Air India and the transaction will now move to the second stage.
Multiple expressions of interest have been received for strategic disinvestment of Air India. The Transaction will now move to the second stage. pic.twitter.com/YJ0fQLK5Hl
— Secretary, DIPAM (@SecyDIPAM) December 14, 2020
Multiple EOIs Received
On Monday morning, Air India’s Director – Commercial, Meenakshi Malik led a group of 209 employees who submitted an Expression of Interest.
“We have submitted an EoI along with a partner who will give us financial backing,” Ms. Malik told Business Standard refusing to disclose further details as they are confidential.
Bidding rules permit a bid by Air India employees, but disinvestment guidelines state that the company will not be able to partner any private company but only partner with either a bank or a financial institution.
Apart from the financier’s backing, each employee willing to participate in the bid will be asked to contribute Rs. 1 lakh towards the bid. The consortium of employees plans to hold a 51 per cent stake in the airline, while the remaining 49 per cent is supposed to be held by financial partners.
“Due to the support we will receive from our financial partner, I anticipate that each of us will have to make a contribution of no more Rs. 1,00,000, to bid for the company, this is a detail which I will be better placed to convey to you all once we have passed the initial stage of the EoI. Moreover, after successfully completing stage one, we are planning our bid in such a way that no single employee will have to take on a financial risk or contribute more than Rs. 1,00,000,” Ms. Malik had earlier written in a communication to employees urging them to bid.
This bid by the employees is believed to be backed by New York-based company Interups Inc.
Pilots and cabin crew unions like Indian Pilots Guild and Indian Commercial Pilots Association, had advised their members not to participate in the airline’s disinvestment process, given that the management had not addressed their concerns over pay cuts, which have been in effect since April this year.
While Tata Sons did not officially comment, the group which has stake in both Vistara and Air Asia India is said to have submitted its bid. Their bid is said to have been done through Air Asia India. Aviatorsbuzz could not independently verify the same.
According to a report in Mint, Tata Group is seeking to persuade its partner, Singapore Airlines, with whom it operates a joint venture–Vistara–to waive off a non compete clause in the agreement to bid for Air India and also partner the conglomerate in its bid.
Qualified institutional bidders, if any, will be invited to start bidding for the airline from December 28, according to the latest government corrigendum.
Air India: 100 % Strategic Divestment
The government, this time around, plans to divest 100% of its equity share capital in Air India Limited, which includes Air India’s shareholding interest of 100% in AI Express Ltd and 50% in Air India SATS Airport Services Private Ltd.
The government had failed to attract any bid for the national carrier, after putting up 76% of airline’s stock two years ago. However, this time around, selling the airline may be a challenge amid the pandemic which has adversely affected the aviation sector.