• Tom Boon-200

    Air India

    IATA/ICAO Code:
    AI/AIC

    Airline Type:
    Full Service Carrier

    Hub(s):
    Delhi Indira Gandhi International Airport

    Year Founded:
    1946

    Alliance:
    Star Alliance

    CEO:
    Campbell Wilson

    Country:
    India

After privatizing former national carrier Air India, the Indian government is now keen to sell its subsidiaries as well. According to reports, officials have started the process of privatizing two out of four former Air India subsidiaries and are gauging the mood of the market before inviting an expression of interest (EoI).

AI subsidiaries to be privatized

When Air India (AI) was offered to the Tatas, several of the airline’s subsidiaries remained with Air India Assets Holding Ltd (AIAHL) – a special purpose vehicle set up in 2019 for holding non-core assets and debt of Air India.

While Air India became a private entity, four of its subsidiaries – AI Engineering Services Ltd (AIESL), AI Airport Services Ltd (AIASL), Alliance Air Aviation Ltd (AAAL), and Hotel Corporation of India Ltd (HCL) – and other non-core assets, including paintings and artifacts, were not part of the deal.

Air India Airbus A320

While Air India was handed to the Tatas, some of its subsidiaries were still retained by the government. Photo: Airbus

The Government of India has been wanting to sell these assets for a while and, on Monday, kickstarted the privatization process of AIESL and AIASL.

Testing waters

Former AI subsidiaries and non-core assets are valued at around $1.8 billion. Currently sitting with Air India Assets Holding Ltd, these are to be eventually sold off by the government to recover some of the cash it spent on Air India. And now, it has been reported that the process to sell two of these subsidiaries has been initiated. An official aware of the development told the Press Trust of India,

“The Department of Investment and Public Asset Management (DIPAM) has initiated investor meetings and roadshows to gauge interest in AIASL and AIESL. We will soon invite EoIs from interested bidders.”

The Indian government is keen on selling AI subsidiaries as well. Photo: Getty Images

Another person added that road shows for the subsidiaries showed good interest among investors whose feedback will be used to structure the sale.

AIASL’s annual report revealed that it handled 51,774 Air India and subsidiary flights in the financial year 2020-21 (FY21), compared with 133,668 flights in FY20. It also handled 26,579 flights of scheduled and non-scheduled customers in FY21, compared with 25,020 flights in FY20. In FY21, AIASL reported a loss of around $25 million due to the pandemic, as opposed to a net profit of $6.2 million in FY20. AIESL’s net profit also took a hit in FY21, dipping to $1.5 million from $3 million in FY20.

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What about Alliance Air?

The only government-owned airline in India, Alliance Air, will also follow in the footsteps of Air India and become a private carrier in the future. The process to sell the carrier and the remaining AI subsidiary, HCL, will also start soon.

Sebastien Mortier via Wikimedia Commons“” data-img-url=”https://static1.simpleflyingimages.com/wordpress/wp-content/uploads/2022/05/ATR72-600_AIR_INDIA_EXPRESS_F-WWEZ_1226_TO_VT-AIT_10_02_15_TLS_(16869587331)-1.jpg” data-modal-container-id=”single-image-modal-container” data-modal-id=”single-image-modal”>

Alliance Air

People in the know had earlier reported that formalities such as looking at the infrastructure available with other subsidiaries and issues such as workforce deployment are also being looked at ahead of inviting any offers to sell the airline.

In April, almost three months after Air India’s privatization, Alliance Air announced that it had completed the process of becoming a standalone airline, which meant that it no longer relied on AI’s network of bookings, customer service, or other services.

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Source: simpleflying.com

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