The Indian government is likely to set Air India’s price in the Rs 15,000-20,000 crore range, with sources claiming that if the highest bidder’s financial offer is less than the reserve amount, it is still likely that he sells the airline. The Center has received financial offers from the Tata Group and SpiceJet founder Ajay Singh for the acquisition of the debt-ridden national carrier.
The reserve price was reached after taking into consideration all the assets that the buyer would get. This includes slots, planes, overseas flight rights, brand value, cash flow as well as the debt burden. Sources, according to You, said the call was made because of the amount of cash infusion that will be required to keep Air India alive in the event the divestment is unsuccessful.
It should be noted that the cumulative sum of Air India debt and losses is close to Rs 1 lakh crore, with a daily loss of around Rs 25 crore. As such, the government sought to secure the deal quickly.
Financial offers are evaluated against an undisclosed reserve price and the offer offering the highest price above the benchmark would be accepted. The government intends to sell 100% of its stake in the state-owned national airline, including Air India’s 100% stake in AI Express Ltd and 50% in Air India SATS Airport Services Private Ltd .
The government’s attempts since 2017 have not generated any significant interest. After receiving feedback from potential investors, the Center in October 2020 amended the EoI clause relating to the transfer of debt from Air India to the new investor, giving bidders the flexibility to decide on the amount of huge debt they wish to absorb.
The share sale process began in January 2020, but the process was fraught with delays due to the COVID-19 pandemic. The government, in April 2021, asked potential bidders to submit financial bids; the last day to place bids was September 15th.
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Air India was founded by the Tata Group in October 1932 and the government nationalized the airline in 1953. The Tata Group was one of several entities that had made an initial expression of interest (EoI) in December 2020 for the purchase of the Maharaja.