InvestorQ : What is the latest status of the privatization of Air India what is being planned during the current fiscal year 2020-21?
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What is the latest status of the privatization of Air India what is being planned during the current fiscal year 2020-21?

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4 months ago
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While there is no confirmation from the government as of yet, it does look like the proposed privatisation of Air India may spill over to fiscal 2021-22. In short, it looks quite unlikely in this fiscal year as it would have to be finalized in all aspects before the Union Budget to be presented on 01 February.

There are surely some interested bidders for the airline as of now. Tata Group, erstwhile owners of Air India, and Interups Fund of the US have put in preliminary bids for Air India. That is not all. Some, 200 employees of Air India have also submitted an expression of interest or EOI for Air India in partnership with Interups Fund.

Once the transaction advisor or TA announces the qualified bidders before 06-Jan; that is when the real big challenge commences. Let me explain why. Subsequent to the short listing, bidders will be provided access to the virtual data room of Air India. Only after access to the VDR will the financial bids will be solicited from the eligible bidders.

Government expects the more time consuming part after the VDR. In fact the government expects numerous queries and clarifications as Air India has been making consistent losses since its merger with Indian Airlines in 2007. With so many clarifications on cost, debt and asset monetization, sources feel more time may be required to complete the process.

Air India has a lot of hidden assets. It comes with 4400 domestic and 1800 international landing & parking slots at domestic airports plus 900 slots at overseas airports. It is still not clear how much debt will vest with the buyer and also how much of real estate franchises the buyer will get to monetize. These things should get clearer now.

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