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A Gulf carrier has also evinced initial interest, sources connected with the disinvestment process told TOI. One of the airlines already has a stake in an Indian carrier and marrying the Maharaja could mean divorcing its partner. Sources said the foreign carriers are in talks with Indian business houses to meet the criterion of “substantial ownership and control”.
A foreign airline can have a joint venture in India provided it has a local partner with at least 51% stake and effective control. Foreign carriers forming a consortium to make a bid for Air India will need to fulfil this rule.
“The four airlines are in active consultation with us. Among the Indian players they are in touch with to form a consortia is a medium-sized domestic airline. The head of an international airline is also eying the process with interest. A leading Indian industrial house is also in touch,” said a source, who did not wish to be identified.
The government has offered to sell 76% in the loss-making national carrier and will transfer a substantial chunk of its debt into a separate company.
When contacted, International Airlines Group (IAG) — parent company of British Airways — said: “IAG doesn’t comment on rumours or speculation.” SIA had also stated recently: “Our priority is the further expansion of Vistara (its JV with Tatas). However, we will keep our options open with respect to the proposed divestment of Air India.” Lufthansa did not comment till time of going to press.
Two Indian carriers — Jet and IndiGo — have said they are not interested in bidding for Air India under current terms of sale.
Government officials, however, did not appear worried. “AI has about 13% domestic market share. IndiGo’s combined domestic market share with AI would have crossed 50% that could have led to issues with Competition Commission of India. Even if the commission were to clear the deal, someone could have moved court on the ground that the combined entity is monopolistic. For this reason and the fact that IndiGo has a robust domestic presence, the airline was seeking to buy only the international arm of AI and AI Express,” said the source.
Apart from these airlines, sovereign funds are also in touch with the government, the source said.
AI has a total debt of around Rs 50,000 crore. Under the terms of sale issued on March 28, bidders for the airline arm — AI, AI Express and AI-SATS (airport service company) — will have to take over debt of Rs 24,576 crore and current liabilities of Rs 8,816 crore. However people handling the sale point out that of this combined sum of Rs 33,392 crore, the interest-bearing debt is only Rs 16,500 crore. The rest is current liabilities and financial leases.