Government clears the air on Air India foreign holding

New Delhi: Extending deadlines by a little over a fortnight in the Air India sale process, the government on Tuesday publicly answered a whopping 160 queries from interested bidders on the civil aviation ministry website. In response to one query, the government made it clear that “no more than 49% of the 76% (stake) offered for disinvestment (in Air India) can be directly or indirectly owned by foreign entities” and that “the majority ownership and control of the consortium should be with resident Indian citizens”.

The government extended the expression of interest (EoI) submission deadline from May 14 to May 31 this month while the deadline for intimation to qualified interested bidders was extended from May 28 to June 15 this year. The government has also tweaked a couple of clauses in a “corrigendum” including on the issue of changes made in bidding consortia. The Union government had a few weeks ago issued the “Preliminary Information Memorandum (PIM)” for “inviting the EoI for strategic disinvestments” of loss-making national carrier Air India through a bid process wherein the government will sell 76 percent stake (equity share capital) in the airline. Currently, the government holds 100 percent stake in the airline. The memorandum covers disinvestment of Air India Ltd along with Air India Express Ltd (low-cost arm and subsidiary of Air India) and the Air India SATS Airport Services Pvt Ltd (AISATS) which pertains to ground-handling.

In response to a query from an interested bidder, the government on Tuesday said, “To meet FDI/SOEC guidelines, the majority ownership and control of the consortium should be with resident Indian citizens. No more than 49% of the 76% offered for disinvestment can be directly or indirectly owned by foreign entities.” In response to another query, the government said, “The conditions to safeguard employees’ interest will be detailed at the RFP (request for proposal) stage.”

Private firm Ernst and Young has already been appointed the “transaction adviser” for the process. After scrutiny of the EoIs received, qualified interested bidders (QIBs) will be identified who can participate in the second stage of the process which will involve the RFP.