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IndiGo, Etihad Airways show interest in boarding Air India

Representatives from two companies have met govt officials and shown interest in the national carrier.

, ET Bureau|
Last Updated: Dec 31, 2019, 02.58 PM IST
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Among the two suitors, IndiGo can bid to own 100% in Air India but Etihad can own only 49% under the current foreign direct investment (FDI) norms.
NEW DELHI: IndiGo, India’s largest airline by market share, and Abu Dhabi-based Etihad Airways have met government officials and evinced interest in ailing national carrier Air India, a senior government official told ET.

“Representatives from these companies have met government officials and, unofficially, shown interest in the national carrier. The Tata Group, however, has not shown any interest yet,” said the official, who sought anonymity.

The government, which could not sell 76% in Air India last year, is offering 100% stake this time. But the response to road shows in Singapore and London were not encouraging.

Officials said that they did, however, see interest from a couple of private equity investors. “There are these two companies and a couple of private equity investors who have shown some interest. An airline as big as Air India is unlikely to receive any more interest,” said the official.

The Centre is likely to come up with the expression of interest (EoI) documents by next month.

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Among the two suitors, IndiGo can bid to own 100% in Air India but Etihad can own only 49% under the current foreign direct investment (FDI) norms.

The norms allow a foreign carrier to own up to 49% in an Indian airline, but allow 100% foreign investment in an airline. This means Etihad can bid for 100% stake in Air India by tying up with either Abu Dhabi Investment Authority (ADIA) or National Investment and Infrastructure Fund.

The National Investment and Infrastructure Fund is an infrastructure investment company anchored by the Indian government, where ADIA is a key investor.

Etihad, till recently, owned 24% in Jet Airways but decided against funding the financially crippled airline, leading to its grounding in April.

Emailed questionnaires sent to IndiGo and Etihad had not elicited any response as of press time Monday.

The government, which did not receive a single bid in its maiden attempt to sell Air India last year, is being cautious this time and has offered various relaxations, such as 100% stake in the airline, substantial restructuring of debt and liabilities and allowing the new owner to offer VRS to employees.

According to the plan being discussed, the government will pay Air India’s dues amounting to Rs 22,000 crore to vendors such as airports and oil companies before putting the airline up for sale. It may also waive the airline’s entire working capital debt of about Rs 15,500 crore, so that Air India is left with a loan burden of about Rs 20,000 crore.

According to the approved plan, Air India will be offered along with low-cost international subsidiary Air India Express as well as its 50% stake in ground-handling company Air India Singapore Airport Terminal Services.

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