New Delhi: Moving forward with Air India stake sale process for the second time in less than two years, the government on Monday issued the preliminary bid document for 100 per cent stake in the debt-laden airline along with fixing the debt amount for prospective bidders and easing the bidding norms.
As part of the ambitious strategic disinvestment, Air India would sell its cent per cent stake in profit-making budget carrier Air India Express as well as 50 per cent shareholding in equal joint venture Air India SATS Airport Services (AISATS). All the three entities would be sold together and management control of the national carrier would be transferred to the new investor.
In a significant move, the successful bidder would have to take only a debt of Rs 23,286.5 crore while the liabilities would be decided depending on current assets at the time of closing of the transaction, according to the Preliminary Information Memorandum (PIM) issued on Monday.
The rest of the amount of the total Rs 60,074 crore debt as on March 31, 2019, would be transferred to Air India Assets Holding Ltd (AIAHL), the special purpose vehicle.
Staff dues of about Rs 1,383.70 crore on account of Justice Dharmadhikari Commission's recommendation on past arrears would be paid by the government.
The new investor would continue to use the 'Air India' brand. The deadline for submitting the bids is March 17.
The government has relaxed the bidding norms wherein net worth for potential bidders fixed at Rs 3,500 crore and minimum stake for an individual consortium partner lowered to 10 per cent. The net worth criteria were Rs 5,000 crore in the 2018 bid document.
Another key change is that an entity can put in a bid on the strength of its parent, which means that an entity floated by a big corporation could participate in the disinvestment process, the person in the know of the PIM details said.
Further, a domestic carrier with zero or negative net worth can own up to 51 per cent stake provided the net worth requirement is fulfilled by the consortium partner.
Briefing reporters, Minister of State for Civil Aviation Hardeep Singh Puri said the reason for the privatisation of Air India is that the government has resources which are scarce.
According to the civil aviation ministry, there are a total of 17,984 employees at Air India and Air India Express. These include 9,617 permanent employees. The count also takes into account those on deputation at the airline.
Excluding those on deputation, the total count would a little over 16,000, the person said. There were no immediate comments from Air India unions on the bid document.
The minister made it clear that all land and building assets, including painting, arts and artefacts would not be part of the transaction.
However, certain land and buildings at Delhi, Mumbai airports and corporate offices which are core assets for running the airline will be given to the new investor on a right to use basis for a limited period, he noted.
"Contingent liabilities related to statutory dues and government dues will be indemnified by the government. Contingent liabilities due for retired employees will be clarified at the RFP (Request for Proposal) stage... corporate guarantees given by Air India on behalf of Alliance Air will not be passed on the new investor," Puri said.
This is at least the third time that the government is attempting disinvestment of Air India, which has been in the red since the merger with Air India Express in 2007. The first attempt for stake sale, when Air India and Indian Airlines were separate entities, was done in 2001-2002 period when the NDA government was in power.
Permanent staff would be offered around three per cent or 98 crore shares of the airline under the Employee Stock Option Programme (ESOP). EY is the transaction advisor for Air India disinvestment process.
In 2018, the government proposed to offload 76 per cent stake as well as transfer the management control but there were no bidders. DIPAM secretary Tuhin Kanta Pandey said that in terms of structuring, the disinvestment plan is on very sound principles.
"We will have net current liabilities to be nil, which means that only that much liabilities as much as current assets will be passed on," he said.
A total amount of Rs 36,760 crore would be transferred to AIAHL as well as excess liabilities that are not matched by the current assets.
"About Rs 56,334 crore of liabilities and debt are coming to AIAHL along with Rs 17,000 crore of assets," he said, adding that net liabilities for AIAHL would be around Rs 40,000 crore.
Queries regarding the PIM and SPA can be submitted till February 11 while the last date for submission of EoI is March 17. The qualified bidders would be intimated on March 31.
Puri said bridging finance required would be available to Air India during the processing time.
Air India Chairman and Managing Director Ashwani Lohani said the airline does not have excess staff and the retiring employees' medical benefits issue is being sorted out.
On BJP's Subramanian Swamy and Yashwant Sinha being critical about Air India stake sale, Puri said the "views of the two gentlemen, I am afraid, does not reflect views of the government". "This deal is wholly anti-national and I will be forced to go to court. We cannot sell our family silver," Swamy tweeted on Monday.
Criticising the move to privatise Air India, CPI general secretary D Raja said the national carrier has the potential to emerge as a powerhouse in the aviation sector and alleged that its problems were because of "government policies".
Congress spokesperson Supriya Shrinate said the sale of Air India has been going on for the last six years when this government came to power.
"Does this government really want to sell Air India. They have to look for a real investor; they have to go for a real strategic sale," she said.
"The government should first say in what manner the government wants to sell Air India," she asked and said that "you (the government) are saying we want to sell 100 per cent but a few days ago it said it would go in for subsidiary sale.
She noted that this is going on for the last six years and no one knows until the actual sale happens. "Now, the Railway and Commerce Minister says if he was not a minister, he would have bought it. It is a good thing that we have such rich people in this government," she said.
With Inputs from PTI
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