India's government of Prime Minister Narendra Modi has formally put the country's flagship carrier Air India on sale with the announcement that it will accept bids for a controlling 76% stake in the loss-making airline. If successful, it would be the country’s most high-profile asset sale in decades, Bloomberg reported.

According to a document uploaded on the civil aviation ministry’s website, Air India’s budget carrier will be completely sold in the offer, while the state will sell a 50% stake in the ground
handling unit separately. The administration may also ask the buyer to conduct an initial public offering. The national carrier has five subsidiaries, a joint venture and a combined workforce of
as many as 27,000.
The controlling stake in Air India comes with roughly US$5.1 billion, or some 75% of the US$7.8 billion total debt of the state-run carrier, while the proposed sale will also include a 100% stake
in Air India's low-cost arm - Air India Express, and a 50% stake in its ground-handling arm - AISATS Airport Services, a joint venture between Air India and Singapore Airport Terminal Services.
AI owns 50% stake in AISATS.
Bids to be submitted until 14 May
All non-core assets, such as the Air India building in Mumbai and other offices, will not be part of the sale and become part of the special purpose vehicle (SPV), which will also house the
working capital debt of the company, a government official was quoted as saying.
The successful bidder would need to retain its stake in Air India and management control of the airline for at least three years, according to the government document.
The winning bidder would also need to ensure that substantial ownership and effective control of Air India and Air India Express would continue to be vested in Indian nationals.
Bids for the assets are expected to be submitted by May 14.
Companies including low-cost Indian carrier IndiGo, owned by InterGlobe Aviation and the local Tata Group have expressed an interest in buying some of Air India's operations.

Various interested parties
Tata Group, the conglomerate with US$103 billion in revenue that owned Air India before it was nationalised, has also said it might consider a bid with its long-time partner Singapore Airlines.
Tata and SIA have a joint-venture domestic airline, Vistara.
Another Indian carrier, Jet Airways, is also likely to take a serious look at an offer - perhaps in partnership with an international carrier. Media reports suggest Air France and Delta may be
interested.
Another potential suitor, Qatar Airways Ltd. - which wants to set up a short-haul carrier in India with 100 aircraft, has reportedly denied a news report of a joint bid with IndiGo.
Air India has been unprofitable since its ill-advised 2007 merger with state-owned domestic operator Indian Airlines Ltd. The company made an operating profit of about 3 billion rupees (US$46
million) in the year through March 2017, primarily due to a slump in oil prices. It still reported a net loss of 57.7 billion rupees, junior aviation minister Jayant Sinha said in February.
Bloomberg quoted Kapil Kaul, South Asia CEO at CAPA Centre for Aviation as saying that “Selling a 76% stake is the second-best option for the government, the best option would have been to exit
completely.”
Nol van Fenema
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