New Delhi: National carrier Air India may not be sold after all if the government finds the bid price to be inadequate.
Union civil aviation secretary R.N. Choubey on Tuesday told reporters, “The government retains the right to sell or not to sell (stake in Air India) if the bid price is found to be inadequate.”
According to the procedure, the floor price (base price for the airline) is decided by the transaction advisor but the government is apprised of it once the financial bids are opened in the Request for Proposal process.
The government, as the owner of Air India, has the right to modify the floor price.
If the government finds that the bid price is lower than the floor price, it could give rise to a situation wherein the government may not sell the national carrier since it would then be a loss-incurring move.
It may be recalled that the government had recently 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. Private firm Ernst and Young has been appointed the “Transaction Adviser” (TA) for the process.
The Union government had a few weeks ago issued a “preliminary information memorandum (PIM)” for “inviting the EoI for Strategic Disinvestment” of loss-making national carrier Air India through a bid process.
Through this, the Centre aimed to sell 76 percent stake of the loss-making 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 the ground handling.
