The Indian Government is ready to "re-examine" the terms of Air India Ltd's privatization after an initial bid, wherein a 75% stake was offered in Air India (AI, Delhi International), failed to attract any bidders.
Economic Affairs Secretary in the Indian Ministry of Finance, Subhash Chandra Garg, told Bloomberg that Narendra Modi's government was not fixated on the need to retain a stake in the airline.
“There’s no fixed objective that government should have 24%. It can be re-examined," he said.
Since the failed tender, Air India (AI, Delhi International) has turned to government to help shore up its finances asking it for an "equity infusion", effectively an annual subsidy, the Hindustan Times has reported. Air India did not disclose how much money it is seeking to receive from the state.
The Indian flag carrier has amassed some INR500 billion in debt as of March 2017. Until 2014, Air India used to receive an annual disbursement of INR30-40 billion from the government, although this amount has since diminished. For the fiscal year 2018/19, government has earmarked just INR6.5 billion to support the airline.
The carrier this week issued a Request For Proposals (RFP) for a short-term loan of INR10 billion rupees (USD148.3 million), backed by Indian government guarantees, to meet its urgent working capital requirements. Financing houses have until June 13, 2018, to submit bids. Air India intends to draw the loan in June in one or more tranches. The renewable tenure of the loan is one year.
Meanwhile, government has now dropped plans to transfer two out of Air India five B747-400s to the Indian Air Force for VVIP operations. New Delhi had considered the move prior to the privatization drive.
