CAPA urges govt for comprehensive restructuring of Air India

Centre for Asia Pacific Aviation (CAPA) today urged the government to carry out a comprehensive restructuring of debt-ridden Air India, which failed to find any taker for its strategic disinvestment today.

CAPA, the Sydney-based aviation think-tank, also said dropping the divestment plan following this failure will be unfortunate, and the government should go for complete privatisation with much easier norms.

In a major setback to the Air India (AI) disinvestment process, the government said no initial bids were received for the proposed strategic stake sale of the airline by the deadline today, and that "further course of action will be decided appropriately".

"Surprised with the outcome as CAPA expected significant interest at the EoI stage. The next steps should include a comprehensive restructuring of AI under a special administration which can be followed by 100 per cent divestment with less complex terms," CAPA said in a statement.

The government had proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players, as per the preliminary information memorandum.

The transaction would involve Air India, its low-cost arm Air India Express and Air India SATS Airport Services. The latter is an equal joint venture between the national carrier and Singapore-based SATS.

Stating that getting no bidder should be treated as a "significant failure," CAPA said dropping the divestment plan following this will be unfortunate.

It expect from the government to quickly address structural issues and resume the process at the earliest, the statement said, adding cost to the taxpayer will be massive with continued government ownership, even in an election year.

Under a turnaround plan approved by the previous UPA regime, Air India is to receive up to Rs 30,231 crore from the government, subject to meeting certain performance thresholds.

The 10-year bailout package began from 2012.

Earlier this month, the government had extended the expression of interest (EoI) submission deadline to May 31, from May 14 earlier. The qualified interested bidders were to be intimated on June 15.

As per the earlier schedule, the details of qualified interested bidders would have been known on May 28.

The government would retain 24 per cent stake in the national carrier and the winning bidder would be required to stay invested in the airline for at least three years, as per the memorandum issued on March 28.

The ailing airline's total debt stood at over Rs 48,000 crore at the end of March 2017.