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Air-India to invite bids for sell-off in Aug

Air-India said on Wednesday that it would invite bids next month for stakes in the national carrier and would seek to complete privatising the airline by March 2001.

"Advertisements soliciting expression of interest from potential bidders for equity stake in Air-India will be released in the first fortnight of August 2000," said a statement by the airline.

It said an expert group that had been formed to steer through the privatisation of the state-owned airline made the decision.

Air-India is the country's main international airline and has a fleet of 26 aircraft.

In May, the Indian cabinet agreed to sell a 40 per cent stake in the state-owned airline, allowing up to 26 per cent to be sold to a foreign partner and 14 per cent to an Indian firm.

A further stake of 20 per cent is to be sold to financial institutions, retail investors and the airline's employees.

The airline has been weighed down by losses of about Rs 10 billion ($232.55 million) and a huge workforce of about 18,000 employees. Its employees-to-aircraft ratio of about 770-to-one is one of the highest amongst international airlines.

However, Air-India has assets such as real estate and a large number of unutilised flight entitlements on key air routes which analysts say would be an attraction for foreign airlines.

A senior Air-India official said a number of foreign airlines had shown interest in buying a stake in the airline, but said it would be premature to disclose the names.

The statement said the expert group had set out a timetable to complete different tasks for privatising the airline, with the sale of Air-India's subsidiary, the Hotel Corporation of India, completed by the end of 2000.

"Proceeds from the sale of Hotel Corporation of India will go to Air-India and is expected to considerably improve the airline's balance sheet prior to divestment," the statement said.

The privatisation of the state-run airline forms part of the Indian government's economic reform programme to privatise state-owned firms, many of which are loss-making.