Air India divestment: New bidders have to absorb this whopping debt to acquire national carrier

By: |
Published: January 27, 2020 9:55:47 AM

Air India, which started in 1932 as a mail carrier before winning commercial popularity, saw its fortunes fade with the emergence of cutthroat low-cost competition. The state-run airline has been unprofitable for over a decade and is saddled with more than $8 billion in debt.

Air India, which started in 1932 as a mail carrier before winning commercial popularity, saw its fortunes fade with the emergence of cutthroat low-cost competition.

Bidders for Air India Ltd. will need to absorb $3.26 billion of its debt, as Prime Minister Narendra Modi’s administration tries once again to sell the national carrier. The entire company will be sold but effective control needs to stay with Indian nationals, according to preliminary terms published Monday. Bids are invited by March 17 with Ernst & Young LLP India as transaction adviser.

Air India, which started in 1932 as a mail carrier before winning commercial popularity, saw its fortunes fade with the emergence of cutthroat low-cost competition. The state-run airline has been unprofitable for over a decade and is saddled with more than $8 billion in debt.

Indian regulations allow a foreign airline to buy as much as 49% of a local carrier, while overseas investors other than airlines can buy an entire carrier. The government didn’t find a single bidder when it tried to sell Air India in 2018.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Can Facebook have your data and yet not have it?
2Here’s all you wanted to know about wireless charging
3India Inc numbers disheartening, firms operating margins by resorting to cost-cutting