The NDA government's move earlier to allow FDI by foreign airlines in debt-ridden Air India upto 49 per cent was an indicator that the Government was serious about disinvestment in the loss-making cash-strapped national carrier so as to bring about fresh infusion of funds.
So far piecemeal sale of the carrier has been the methodology, but the present government desires to do it in one go in the interest of private players, who would reap the benefits and public money will be used by the government for meeting the major debt burdens, the trade union said. As per the memorandum, the selected bidder should abide by conditions set out in the Request for Proposal (RFP) or the definitive documents to safeguard employees' interests.
"Along with the debt of Rs 33,392 crore and the debt reflecting lease rentals which is off balancesheet, the minimum acquisition price for Air India thus comes to be close to Rs 43,000 crore, unless the government decides to sell some aircraft" he added.
In an official document that accompanies invitation for the Expressions of Interest (EoI) by interested bidders to purchase Air India, the government said the disinvestment would cover Air India, its low-priced arm Air India Express and ground-handling firm Air India SATS Airport Services. Modi in January tweaked rules in January to include Air India which wasn't a part of those rules until then.
The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.
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It need be mentioned that Saudi Arabia does not recognize Israel and overflight rights to Air India to fly to Tel Aviv has been seen as diplomatic victory for the Israelis.
Despite this enormous task of turning around an airline which has accumulated losses of Rs 27,231 crore between 2012-13 and 2016-17, and even in 2016-17 posted a loss of Rs 5,765 crore on revenues of Rs 22,177 crore, there will be many that will be interested.
Attractive slots at capacity-constrained airports and opportunities to increase worldwide market share are among the highlights of Air India and Air India Express, as per the preliminary information memorandum issued on Wednesday for the proposed divestment. In case of domestic airlines with a negative net worth, the consortium's ownership will be restricted to 51 percent.
As tempting a proposition it is to own this 85-year old airline which was started JRD Tata, the risks associated with its purchase are equally high.