Airlines Indian government to sell parts of Air India

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The Indian government has published a preliminary information memorandum informing potential candidates about the sale of Air India.

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The Ministry of Civil Aviation as part of the Indian Government has announced it will sell a 76% stake in Air India. Additionally, interested bidders can acquire the entire the subsidiary Air India Express and a 50% equity share in the ground handling operator SATS (Airport Services Private Limited). Other business units like Alliance Air, Air India Air Transport Services or Air India engineering will not be involved in the transaction and treated as separate special purpose vehicles.

Overview over Air India and its subsidiaries Source: AVIPEO.COM © AVIPEO.COM

Possible candidates could take over the fleet of Air India, but are forced to assume debts estimated around $5 billion. Despite the high costs for an acquisition, several companies are interested in shares of Air India. As the Indian market is one of the fastest growing aviation markets in the world and Air India is owning interesting slots and a broad route network with flights to the US and other long-haul destinations, Air India is an attractive company.

According to Indian media, several carriers are interested in acquiring parts of the Indian Star Alliance carrier. Newspapers reported, Air France-KLM has built a consortium together with Jet Airways and Delta Air Lines which could prepare an offer for the acquisition of Air India. As Jet Airways is an Indian competitor, the group could be allowed to acquire the entire 76% stake in Air India. Indian law allows foreign airlines to acquire a maximum share of 49% in an Indian carrier. India’s largest carrier IndiGo and Singapore Airlines, which already operates the Indian low cost carrier Vistara, are other possible bidders for parts of Air India.

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