NICHOLAS IONIDES SINGAPORE
New Delhi's plans to part-privatise state-owned Air India have been thrown into further doubt following the withdrawal of Singapore Airlines (SIA) from the only consortium still in the running.
SIA announced early last month it had dropped its bid to acquire a large minority stake in Air India in partnership with the Tata Group, saying it was "surprised by the intensity of opposition" to privatisation plans from politicians, trade-union representatives and the media.
"In such an adverse climate, SIA is not confident that it can play a useful and effective role," the company said.
The carrier also cited the global economic slowdown for dampening its interest in Air India, along with its shareholding in troubled Air New Zealand which has been "demanding more attention and requiring a commitment of substantial financial resources".
"All of these factors have led SIA to the inevitable conclusion that the continuation of its bid would not be in the best interests of the parties involved," the airline added.
The Tata Group is still officially considering whether to pursue a stake in Air India - though few were confident it would remain in the hunt.
The government has been working on the privatisation of Air India and that of Indian Airlines for over a year. The plan for the latter, which proposed a sale of 26% to a local strategic investor and 25% to employees, the general public and financial institutions, was scrapped in July after the only two bidders were disqualified. Under the Air India plan, 40% is available for sale to a strategic partner, including 26% to a foreign component, with 10% for domestic institutions and 10% for staff. The government would own the remaining 40%.
Source: Airline Business
