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New Delhi to divide Air India into four units for sale

New Delhi has detailed that it will split state-owned Air India into four companies and offer at least 51% in each for sale, as part of its divestment plan for the airline.

In a televised interview with BloombergQuint, minister of state for civil aviation Jayant Sinha, says that Air India and its low-cost subsidiary Air India Express will form the core airline business. The other three units are regional carrier Alliance Air, MRO operator Air India Engineering Services and ground handler Air India Air Transport Services.

"We are creating the airline and its subsidiaries to have a much more efficient and cleaned up structure that will be available for sale."

In addition, New Delhi will pass Air India's "unsustainable debt" of over Rs500 billion ($7.6 billion) "through two filters".

The government will first assign all debt linked to airline-related operational assets such as aircraft, hangars and equipment for maintenance to the four respective units. Thereafter, remaining debt will be put in a special purpose vehicle.

Sinha says New Delhi is expected to call for Expressions of Interest (EOI) in the four units by the first week of February.

"Interested parties will then have 60 days to answer the EOI, and we will shortlist them and then they can put in a formal bid."

The bid evaluation process will take between six to eight months, and operations of the respective units will then be legally transferred to the winning bidders by the end of the year.

So far, low-cost giant IndiGo has made public its interest in acquiring Air India's international operations as well as Air India Express, while Vistara's interest has also been widely reported. Indian aviation services firms Livewel Aviation and Bird Group have meanwhile expressed interests in AIATS.

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