On Thursday, 31st May 2018, the last day of bid for Air India to sell off except 24% retained stake. But loss-ridden Air India has knock out with not a single entity showing interest in the national carrier.
The transaction adviser informed that “There is no response received for the expression of interest (EoI) floated for the strategic disinvestment of Air India. And further course of action will be decided suitably,” immediately aviation ministry tweeted after 5pm declaring the deadline for submissions.
Civil aviation minister Suresh Prabhu and his deputy Jayant Sinha opted to stay quiet on the failed attempt to sell the cash-guzzler even as they were busy tweeting about a pick-up in the economy.
On Wednesday, 30th May 2018, Aviation secretary R N Choubey, expressed hope that bids would come even at the last hour, adding further on Thursday, 31st May 2018, that the government had expected better response.
“Though it did not meet the expectation of participation that we had. Inputs will be taken from the transaction adviser on what went wrong, and the plan is to reach the alternate mechanism for solutions with in couple of weeks,” said Choubey, without commenting on Air India privatization, which is in a doubt will happen in the remaining tenure of this government.
We would not want AI to lose market share and may discuss allowing the carrier to continue with their expansion plans in the interim like getting more planes and adding routes, which were put on hold due to the planned divestment,” said Choubey, pointing out that the government will move swiftly in dealing with the problem child.
Government, Airline executive and consultants will be resolving the listed issues to make sure that the Maharaja gets a taker. Otherwise, no “bakra” will be found as former aviation minister A G Raju had said.
The key issues troubling investors are fate of AI’s 27,000-strong workforce, Rs 50,000-crore debt-cum-losses, government offering 76% in the airline and retaining the balance. The bidder was expected to take on Rs 33,392 crore of this debt under the terms of sale that had no takers.
Senior government officials admits that the terms of sale will need to be pulled off if AI has to be privatized, there are rare chances of that happening in the remaining term of this administration — which is being seen as a major setback to the most ambitious disinvestment taken up by PM Narendra Modi. A government official said that offering the entire equity would be a wiser option as private players want no government intervention.
“A big selloff like Air India cannot happen in the last few months of a government’s tenure. Anyone expecting to put thousands of crores will be worried about how the deal will be viewed in case of a change in administration after the polls. As it is, taking on AI means acquiring huge issues and you do not want CBI, CVC and CAG running down your neck later on if the party selling AI does not return to power,” said a source. A corporate entity, which had the first meeting with EY on AI sale, had raised the issue of elections being too close.
The unions, which have been opposing the sale, are rejoicing. “No bids at the end of the day. Victory for joint forum in our endeavor of save AI,” said a leader.
A group of ministers from finance, aviation and other ministries will prepare recommendation for FM -headed GoM, which will take the final call on what needs to be done for AI till the polls.EY will give its report to the government on the issues troubling potential investors, which need to be changed, if AI has to be sold.
Picture credits: Business Line