Search the Internet            Tips

India asks bidders to finalise partners for A-I, IA stake

India on Friday asked bidders for a stake in Air-India and Indian Airlines to finalise joint venture consortium partners ahead of submitting their technical bids by the end of this month.

The government said in a statement that qualified candidates for the Air-India stake had been sent bid packs with details of the initial shareholders agreement, share purchase agreement and a request for separate business proposals.

"This will be followed by the screening of technical bids, including security clearance of the consortium parties," it said.

India's Tata Group in partnership with Singapore Airlines and an Air France-and Delta Airlines combination all figure in a pruned list of bidders for a 40 per cent stake in Air-India.

Up to a dozen bidders were initially believed to be in the race for the slice of the state-owned international carrier, but New Delhi announced last month that three had been disqualified because they did not fulfil all the required criteria.

A bid by Air-India's pilots' union had been rejected.

The government hopes to sell a 60 per cent stake in Air-India, which has piled up losses of Rs 10 billion in the past five years.

Forty per cent will be sold to a "strategic investor" -- which would include a maximum 26 per cent stake for a foreign airline -- and 20 per cent to employees and financial institutions.

New Delhi also plans to sell 26 per cent of its equity in Indian Airlines, the state-run domestic carrier. Consumer goods giant Videocon and India's Tata group have both bid for a slice.

Industry officials said the government was keen that the bidders should finalise their joint venture partners as further pruning would not be possible without knowing the track records of each consortium.

Air-India's privatisation has attracted strong interest because the airline has landing rights in key cities in Europe, the United States and the Middle East.

Experts say any airline which acquires a stake in Air-India would be in a strong position globally because routes over India provide a corridor between Asia and Europe.

Air-India has an ageing fleet of 26 aircraft and is currently unable to fly on many of the routes for which it has landing rights.

Tell us what you think of this report