Gov’t mulls further Air India enticements, may postpone sale

Despite the evident lack of interest so far, India’s government has decided to press ahead with its attempt to privatise Air India (AI, Mumbai Int’l) and is discussing other ways to tempt prospective bidders, except for making more cuts to its debt pile, “senior government sources” told the Economic Times. Other sources told the Hindustan Times, however, that the government may defer the long-planned sale by up to three years. “There are a few options on the table. Some relaxations have to be given. Restructuring of the transaction will have to take place, as some investors don’t want things to be fixed,” one senior official told the Economic Times, adding that any decisions on the issue would be taken within ten days. “Maybe start with the expressions of interest and decide [on the value] before the bids are closed, but we will have to take a call on that,” he said. Even if the government opts to sell Air India at the enterprise value, without some or all of its remaining debt, another official said, “there is a concern of under-selling the asset despite the pandemic, because the global situation appears to be improving.” The flag carrier’s current debt liability stands at more than INR230 billion rupees (USD3.12 billion) following the transferral late in 2019 of almost INR295 billion (USD4 billion) from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited. A third unnamed senior government source told the Economic Times: “Deferring the divestment process is not even an option. If we were to wait, the situation will only get worse.” According to two inside sources, also anonymous, cited by the Hindustan Times, however, the government is entertaining a deferral of the submission of bids – currently timed for October 30 – by two to three years until the current turbulence subsides. It has already extended the deadline four times. The government may also allow bidders to say how much debt they would assume while placing a value on the 100% stake, one of these sources said.