New Delhi: IndiGo, India’s biggest budget airline operated by InterGlobe Aviation Ltd, has expressed unsolicited interest in Air India, minister of state for civil aviation Jayant Sinha said on Thursday morning.
IndiGo sent in its interest early on Thursday morning after the Union cabinet on Wednesday formally approved the privatisation of national airline Air India Ltd and five of its subsidiaries. “The first formal expression of interest has been received from IndiGo,” Sinha said. He added that other players, including some international ones, have also shown interest in the airline, without naming any.
Aviation secretary R.N. Choubey said IndiGo will have to apply when the tenders are floated.
An IndiGo official who declined to be named confirmed the interest in Air India. The airline’s spokesman said the company was in a silent period and hence could not comment.
IndiGo controls about 40% of the domestic market, with 126 planes and 854 daily flights.
On Wednesday, finance minister Arun Jaitley said at a press briefing that he would be heading a group to work out procedures for the Air India disinvestment.
The group under Jaitley will decide on the treatment of unsustainable debt of Air India, hiving off certain assets to a shell company, spinning off and selling stakes in three profit-making subsidiaries, the quantum of disinvestment, and the eligibility criteria for the bidders, the government said in a statement.
This group will then report back to the Union cabinet for final approvals. The constitution of the group will be done “quite fast”, Jaitley said without mentioning any timelines.
Air India’s outstanding debt burden stand at Rs52,000 crore.
The airline was launched in 1932 by J.R.D. Tata as Tata Airlines. Its name was changed to the current one in 1946. The government decided to take it over in 1953. In 2000 too, also under a Bharatiya Janata Party (BJP)-led government, there was a move to privatise Air India but it went nowhere.
The airline has the largest domestic and long-haul fleet of 140 planes in the country and flies to nearly 41 international and 72 domestic destinations.
Apart from the planes, the airline also has vast land holdings, including nearly 32 acres in central Mumbai, besides its iconic headquarters on Marine Drive valued at more than Rs1,600 crore. It also has properties in New Delhi, London, Hong Kong, Nairobi, Japan and Mauritius.
The airline has so far received Rs23,993 crore of the Rs30,231 crore equity infusion promised by the government under a financial restructuring plan in 2012. It reported a loss of about Rs3,587 crore in 2015-16, compared with a loss of Rs5,859 crore in the previous year.
The Economic Survey 2017 recommended that the government privatize Air India. Late last month, finance minister Jaitley disclosed that the aviation ministry had been asked to look at all options of privatisation.