On Wednesday, India said on Wednesday it plans to sell a controlling stake in Air India along with roughly $5.1 billion of the state-run carrier’s debt, one of the biggest divestments undertaken by Prime Minister Narendra Modi’s government.
The government plans to sell a 76 percent stake in the carrier that operates both domestic and international routes, according to official bid documents released by the ministry of civil aviation. The proposed sale will also include a 100 percent stake in Air India’s low-cost arm – Air India Express, and a 50 percent stake in its ground-handling arm – SATS Airport Services.
Bids for the assets are expected to be submitted by May 14. Modi’s cabinet gave the go-ahead last year to sell the loss-making flagship airline after successive governments spent billions of dollars to keep it solvent.
But its debt burden of about $8 billion and a bloated cost structure have been a concern. Previous attempts to offload the airline have been unsuccessful. If Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country’s most intractable problems.
Air India has six subsidiaries – three of which are loss-making – with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.