The government is considering revising the terms of sale for Air India, including offering a 100 per cent stake, after its latest attempt to sell 76 per cent of the debt-ridden airline failed to draw even a single bid.
Transaction advisor EY has cited the clause of the government holding a minority stake in the state carrier as the biggest reason for the failed disinvestment bid.
“We are looking at changes to the privatisation. We have a 24 per cent ownership clause, till we change it,” said a senior official involved in the process.
The development comes after the government received EY’s analysis on the failed sale process. In its report to the government, EY listed four reasons that proved to be a deal-breaker — the reluctance to sell 100 per cent, a clause to retain employees for a year, the insistence to operate the airline at an arm’s length basis for three years and reluctance of Indian airlines to go for an inorganic expansion. Business Standardhas reviewed a copy of the suggestion.
“The government will take a call based on EY’s report. A core group of secretaries on Air India’s divestment is expected to meet soon on the matter and firm up its next plan of action. Based on this panel’s recommendations, the Group of Ministers on Air India will take a decision,” said a government official.