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India completes shortlist of Air-India bidders

The Indian government said it has completed a shortlist of bidders for state-owned Air-India, but would not reveal the names.

Those on the shortlist would be invited within the next two weeks to carry out due diligence on the international carrier, divestment secretary Pradip Baijal said.

Two to three bidders for the loss-making carrier were left off the shortlist because they did not "meet the bid qualifications such as minimum net worth," he said.

A source close to the bidding process said the Air-India pilots' union was one of the bidders knocked out.

Some of the world's biggest aviation names have queued up for a stake in Air-India. Singapore Airlines, in tandem with India's Tata Group, Dubai's Emirates, and Air France in league with Delta Airlines, have bid.

Air-India is drawing interest because of hidden assets such as a regional strategic hub, a foothold in the growing Indian travel market, a popular brand name, crucial bilateral flying rights and real estate, aviation analysts say.

But the government has not put a price tag on the airline and analysts say not enough is known about the airline to come up with a valuation estimate.

The bidders will put a price on their offer once they complete due diligence in which they will look at the airline's financial records.

Foreign airlines can individually bid for a 26 percent stake in Air-India, or a 40 per cent holding in partnership with an Indian company.

Get best price

The government plans to keep the names on the shortlist under wraps to get the best price, Baijal said.

Big airlines apart, the Hindujas, the Britain-based expatriate Indian family, and another expatriate tycoon, steel billionaire L N Mittal, are also in the race.

British Airways and Qantas are technical advisors to the Mittal-led bid, although the British airline has said it could end up owning a small stake in the Indian carrier.

Baijal said the government did not plan to set a time limit for the due diligence process.

"An investor who is putting in money into a company has the right to thoroughly analyse and study that company," said Baijal.

He said all bidders would be made to sign a confidentiality agreement before being invited to conduct due diligence to protect Air-India's interests.

The government has said it hopes to conclude the sale by the end of the financial year in March.

Air-India has racked up losses totalling Rs 10 billion Indian ($213.9 million) and Rs 38 million in debt. The airline hopes to retire a big chunk of its borrowings by the sale of its hotel chain unit. The chain, with a prime property in Delhi and two in Bombay, will be sold before the airline.

Baijal said bidders will also be allowed to change partners right until the time they put in the price bid. But the new partner will not be allowed to carry out due diligence.

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