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Air India privatization suspended as no bidder showed interest
The Indian government suspended privatization process of national carrier Air India, as no bid was made to acquire the 76% stake in the debt-ridden airline, Minister of Commerce and Civil Aviation Suresh Prabhu announced on June 19, 2018.
For Prabhu, the failure of the sale is due mainly to market factors, as “the aviation sector globally is facing lot of headwinds”, like fuel costs and uncertainty over exchange rates, Times of Indiareports.
Another factor for the suspension is the coming general election in the second quarter of 2019. However, Prabhu reaffirmed the commitment of the government to keep Air India efficient. “If need be, we can restart that or any other process given the appropriate market conditions”. Meanwhile, Indian authorities will continue to support the company financially.
Several bidders including IndiGo were thrown off by the conditions in which the government expects to sell Air India. While the slots of the company may be attractive for acquisitions, three of its six subsidiaries are currently in debt. But the government stays determined to sell a 76% share of the whole company, forcing a buyer to a debt recovery of $5.1 billion.
The airline is estimated to be worth $5.84 billion and currently holds a total debt of almost $8 billion, while employing 27,000 people. In June 2018, Air India required a short term loan of $145 million to keep operating.
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