A group of 200 Air India employees is also expected to submit an expression of interest, the deadline of which is Monday at 5pm. The group claims to have a financial investor on board. SpiceJet’s Ajay Singh is also considering artificial intelligence, but the national airline declined to comment. Unlike in May 2018, when the first attempt to sell AI ended with no suitors, this time there are multiple interests.
Minister of Aviation Hardeep Singh Puri, who last year said AI will have to shut down if it is not privatized, stated on Sunday: “(AI’s divestment) is a confidential procedure. The department in question (DIPAM) will comment at the appropriate time. ”
Although Tata Sons has a top-tier full service company, Viewer, in partnership with Singapore Airlines, decided to channel its interest in AI through the low-cost airline AirAsia India. Singapore Airlines was not interested in participating in the already distressed AI’s privatization program, as it would only add to Vistara’s financial woes and its own. The Southeast Asian company is in the midst of a surge in liquidity after it posted its biggest quarterly loss due to a drop in travel demand due to the coronavirus. Meanwhile, AI’s combined debt and liability load is almost Rs 90 billion.
Sources said that since AirAsia India was formed before Vistara, the former’s letter allows it to enter the full service business. Recently, Tata Sons increased its stake in AirAsia India from 51% after the Malaysian partner expressed its inability to inject new funds into the joint venture due to financial problems in its home country. The Tata Group, which founded AI as Tata Airlines in October 1932, according to industry observers, he was considered the most likely winner. The government took control of AI in 1953.
This time, the government has substantially improved the conditions of sale of the AI. It has offered for sale its 100% stake in AI and AI Express, instead of 76% on the first try, and the full 50% it owns in the AI-SATS ground handling joint venture. Additionally, potential buyers will now bid on the basis of business value (EV). This means that instead of having to take on a predetermined level of airline debt of Rs 23 billion, they will now price an EV based on their estimate of AI’s combined equity and debt value. The winning bidders will decide who is trading the highest EV value and at least 15% of this value must be paid in cash, while the remainder can be assumed as debt.
The bidders had requested clarification from the Department of Investment and Management of Public Assets (DIPAM) on the changes. One of them, citing huge cash requirements for things like the AI fleet upgrade and the VRS scheme, suggested that the government sell AI without asking for any cash payments up front.
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