India's government is considering an initial public offering for Air India among other measures after it failed to attract a single bid in its efforts to sell a 76% stake in the state-owned carrier.
Speaking to FlightGlobal, a source close to the developments says the IPO plan is "one of a few ways of moving the divestment process forward". If it proceeds, the IPO would most likely see it list in India, and raise additional working capital for the airline.
The source adds that New Delhi is "studying all the options", including possibly selling out of the carrier altogether, or selling parts of the carrier separately.
New Delhi had tried to sell a 76% stake in Air India, which includes its Air India Express subsidiary and a 50% stake in ground handler Air India SATS. However no expressions of interest were received at the closing of the process in May.Observers have said that one major obstacle to Air India's sale was the requirement for the new owners to take on half of the Star Alliance carrier's Rs488 billion ($7.47 billion) debt, plus about Rs88.2 billion in current liabilities.
A number of interested parties had expressed interest in buying parts of the airline, such as its international operations and groundhandling units, but that was not permitted under the EOI process.
While uncertainty around its privatisation continues, Air India's operations appear to be under some financial pressure. Last week it issued a tender seeking a government-guaranteed short term loan of up to Rs10 billion to meet urgent working capital requirements.