Prime Minister Narendra Modi’s government will review plans to sell Air India Ltd after his administration’s most high-profile privatization offer ended in a whimper with no buyers showing interest in the unprofitable flag carrier. As the deadline to show preliminary interest expired on 31st May, no bidder came forward to propose purchasing 76% of Air India, which was offered along with $5 billion debt.
Apart from the airline’s heavy debt and high losses, potential bidders had to grapple with uncertainty about the government’s demands on employee retention, or any other downside from governments decision to retain a 24% stake. Besides, there were peculiar clauses such as one that required buyers to retain the Air India brand for a specified period. Interested parties balked at the terms when the government made it clear that it didn’t wish to sell Air India in parts.
Air India’s fleet includes more than 100 Boeing Co. and Airbus SE aircraft that make more than 2,300 local flights weekly to 54 airports. It has 2,543 landing slots at airports including New York, London, Paris and Tokyo.
The failure is a setback to Modi’s reformist image ahead of national elections due next year. In the past two decades, Air India lost out to carriers such as Singapore Airlines Ltd and Emirates that expanded flights to India- the world’s fastest-growing major aviation market