Search the Internet          Tips  Sites: Finance, Investment

Air-India due diligence to begin next week

Two consortiums bidding for a 40 per cent stake in state-run national carrier Air-India will be invited next week to conduct due diligence, a senior government official said on Thursday.

Singapore Airlines and the Tata Group are one of the consortiums bidding for the international carrier. The UK-based billionaire Hinduja brothers form a second bidding group along with Lufthansa Consulting GmbH.

Foreign airlines can bid for a maximum of 26 per cent in Air-India, while the remaining 14 per cent must be held by an Indian company.

Air France and Atlanta-based Delta Airlines dropped out of the bidding after they failed to find an Indian partner.

Analysts have been unable to put a price tag on Air-India saying they needed more information about the airline.

The government official said a data room has been set-up in Bombay where Air-India is headquartered for the due diligence.

The government hopes to complete the sale by the middle of this year.

Will the sale go through?

However, there are doubts about the high-profile privatisation going through as the ruling coalition has been weakened by a barrage of criticism from opposition lawmakers over alleged corruption in defense deals.

Protests that followed the recent privatisation of aluminium producer Bharat Aluminium Company (Balco), where workers have been on strike over the past month, have also raised doubts about future sales of state-run units.

Civil Aviation Minister Sharad Yadav told reporters this week that he favoured "strengthening Air-India" till the time the privatisation took place.

The Indian flag carrier is set to report a loss of Rs 500 million for the year ending on Saturday, up from a loss of Rs 380 million the previous year -- its seventh consecutive year in the red.

The 25-aircraft airline will add another two aircraft to its fleet between April-May this year.

Tell us what you think of this report