Will UAE airlines, NRI consortia buy-out Air India?

Eudore R. Chand

NEW DELHI 31 October 2020: Air India is up for sale. The question now is will UAE’s airlines – or even a consortia of expatriate Indians – make a bid for India’s national global carrier?

The Indian government has extended the deadline for the sale of Air India, the state-owned airline, “in view of the prevailing situation arising out of Covid-19,” the Department of Investment and Public Asset Management notified potential buyers.

Yesterday was the deadline for submitting an Expression of Interest (EoI), by investors, most of whom are expected to be foreign airlines or consortia created by wealthy non-resident Indians (NRIs), such as the ones living in the Gulf.

The new deadline for the submission of EoIs will be December 14. Bidders who qualify will be intimated by December 28. Submission of EoIs is the first stage of the bidding process, after which potential investors will be given sufficient time for submission of financial bids.

The Department of Investment and Public Asset Management also announced significant changes to the bidding norms for privatising Air India. With the changes, bids will now be allowed on the basis of enterprise value. Bidders can now quote a combined value, based on equity and debt and the highest offer will win the bid, said Wam.

In corporate acquisitions, EV is the equity value of a company along with short-term and long-term debt as well as cash reflected on a company’s balance sheet. With the changes, potential investors need not accept any pre-fixed level of debt. However, they will be asked to pay up 15 percent of the airline’s EV quoted by the government, which now owns 100 percent of Air India.

Before the latest changes to bidding rules, potential buyers were required to take over the airline’s entire estimated residual debt. The rules provide for one-year job protection for Air India’s 9,600-strong permanent workforce.



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