Interested parties will be allowed to bid separately for subsidiaries of AI. The national carrier has five subsidiaries — low-cost airline AI Express; ground-handling arm AI Air Transport Service; maintenance, repair and overhaul arm AI Engineering Services; regional operator Alliance Air; and Hotel Corporation of India. which runs Centaur hotels.
"We have so far received formal expression of interest (EoI) from IndiGo for AI's airline arm. For the groundhandling and MRO subsidiaries, a few others have done the same," Sinha said. Some players, including Tatas, have informally indicated interest in AI's airline operations.
IndiGo's EoI was for the "international airline operations of AI and AI Express. Alternatively, it is equally interested in acquiring all of the airline operations of AI and AI Express". Now Sinha has made the government's intention clear that AI's international and domestic operations will not be sold separately.
Ernst & Young (EY) is the transaction adviser for the AI sale. Sinha said, "The divestment of AI is a time-bound process and we expect to award the bids in six-to-eight months. We are going to provide flexibility in the bidding process. Bidders can bid for as many subsidiaries as they want. The transaction adviser will call for multiple bids. It will be a market-driven process."
An AI-specific alternative mechanism or group of ministers headed by FM Arun Jaitley will decide on aspects like who all should be eligible to bid for the airline — basically to see if foreign airlines in JV with Indian or foreign partners should be allowed to buy the Maharaja. Current rules allow Indian carriers to be owned fully by foreign entities but put a cap of 49% on ownership by foreign carriers. This panel will also decide on issues like treatment of AI's unsustainable debt and hiving off certain assets to a shell company.
The FM-headed panel will decide how to make AI — with its debt of Rs 52,000 crore — attractive enough for bidders. The airline has a working capital loan of Rs 30,000 crore and Rs 22,000 crore on its books.