A few months ago, we talked about the upcoming Air India sale process and IndiGo being one of the first suitors turning up to show up. Since then, the process has moved at a snail’s pace. Somewhere last month, we heard for the first time about the team of investment bankers and advisors being announced. I was never sure about the airline being sold off by March 2018, but now the government accepts the fact too.

There have been a few decisions made along the way, however, and some of these are important milestones in the sale process.

• The Government of India stated yesterday that they will not carve out the operations of the airline. This was something IndiGo was looking forward to doing, as in cherry pick their international operations and acquire that specific part.
• The Government has also said that they are identifying which subsidiaries of the airline will be sold separately. Essentially, this means that the hotels and the landbanks and the ground handling and so on could go to separate people. There are five subsidiaries up for sale, which includes Air India Express, Alliance Air, Air India Air Transport Services (the ground handling co.), Hotel Corporation of India (Centaur Hotels), and Air India Singapore Air Transport Services (AISATS). Just not the airline. It is going in one piece.
• The government is looking at how to slice out the debt of the airline, which of course, is the reason no one is excited at all about this sale process. This massive liability is the elephant in the room no one wants to talk about. They have now hinted that they may take away a part of the debt from the airline before selling it off, but till they play their cards, I don’t expect any other suitor to come forward to buy the airline.

The Government, or at least the minister-in-charge of Aviation, fully expects Jet Airways and SpiceJet to bid for the airline, given ,he states that 14% domestic and 17% international market share is not something to look away from for any carrier who is in the space. Of course, everyone will take the documents from the government for the airline, because who does not want to pour over a competitor’s information and learn something about it’s working, even though it is not the best in class.

So clearly, we need to wait and see now how Air India will fly away, and who will take it on? Do you have any thoughts in mind about how Air India should be sold?