Indian Government Kicks Off Latest Attempt To Sell Air India

Air India Boeing 787-8
Credit: Rob Finlayson

The Indian government has officially launched a sale process for Air India, with a call for expressions of interest (EOI) from potential bidders that establishes a time line and conditions.

The government is proposing to sell 100% of the loss-making airline, according to the EOI information. Also included in the sale will be 100% of Air India Express, and 50% of Air India SATS Airport Services Ltd. Ernst & Young has been appointed as sole transaction advisor.

This is the government’s second attempt to sell the national airline. A previous effort in 2018 failed to find a buyer, partly because of the airline’s massive debt and also because the government wanted to retain a minority stake. This time, however, the government has committed to divesting its entire stake in Air India.

However, the airline still cannot be completely taken over by a foreign airline or company. The government has stressed that under Indian law, “substantial ownership and effective control” must remain with Indian nationals. The EOI announcement also details other conditions that must be met by bidders and consortiums of bidders, including minimum net worth requirements.

The government has decided to transfer much of Air India’s massive debt load to a separate entity before the sale in an effort to make the company more attractive to buyers. Some of Air India’s subsidiaries will also not be part of the sale, including regional carrier Alliance Air, Air India’s engineering and MRO unit, a ground and cargo handling company, and a hotel and flight catering business.

Under the time line announced by the government, the deadline for expressions of interest is Mar. 17. Before that, written queries can be submitted until Feb. 11, with responses sent by Feb. 25. Qualified bidders will be notified by Mar. 31, and a shortlist will be compiled for the second stage of the bidding process. 

According to the government notice, Air India and Air India Express hold a 12.8% share of the Indian domestic market, trailing LCCs IndiGo and SpiceJet. Air India and its subsidiary hold a 50.64% share of the international market among Indian carriers, and a leading 18.4% international share including foreign airlines. The government also highlights a portfolio of valuable slots in Indian and overseas airports.

The EOI information lists 121 aircraft in the Air India fleet, comprising 43 widebodies and 78 narrowbodies. Of the total, 32 are owned, 33 are under finance lease, 21 are under sale/leaseback arrangements, and 35 are dry leased. Included in the fleet totals are 18 grounded aircraft.

Air India Express is listed as having 25 narrowbodies, with 10 owned, seven under financial lease, and eight dry leased. 

Adrian Schofield

Adrian is a senior air transport editor for Aviation Week, based in New Zealand. He covers commercial aviation in the Asia-Pacific region.