India’s government has once again extended the deadline for expressions of interest in national carrier Air India. This is the third extension – will anyone buy it this time?
Government of India extends deadline on Air India
Yesterday, in a press release, the Government of India shared the news that it would extend the deadline for bids on Air India. The Ministry of Finance said on June 27th that it would accept expressions of interest up until August 31st.
This is the third time that the government has extended the deadline for bids as desperation mounts to find a buyer for the national airline. Until yesterday, expressions of interest had to be submitted by June 30th. A list of qualified bidders would then have been drawn up on July 14th. With an extended deadline, qualified potential buyers will now be selected on September 14th.
The bidding process for Air India started in January this year. At that time, the initial deadline for interest was on March 17th. That was pushed back to April 30th and again to June 30th.
Why is the government extending the deadline?
While the reason behind the deadline extension is entirely to do with increasing the bid’s chance of success, this time, it seems like it was inevitable given the current climate. In the release, the Ministry of Finance in India stated that,
“[the] changes are as per the requests received from the [interested bidders] in view of the prevailing situation arising out of COVID-19.”
So, coronavirus is (yet again) to blame, but will this new extension ensure that Air India actually gets sold? Of course, this is not the first time that the airline has been on the market. Back in 2018, the government launched a campaign to sell a majority stake in the airline.
A 76% stake in Air India was on the table, so what went wrong? Quite simply, investing in Air India is a rather arduous task. Back in 2018, the sale of the shares came with a weighty debt of $4.7 billion.
Will Air India sell this time around?
The latest deadline extension certainly does not show that much optimism for Air India finding a new owner. However, the government’s release does suggest that people are interested in the airline. In fact, back in March, Air India reportedly received an expression of interest from Vistara.
For investors, there is a lot on the table. Not only would a new buyer receive 100% of Air India but also 100% of its subsidiary Air India Express and a 50% stake in Air India Sats. Added to that, Air India boasts lucrative airport slots and many aircraft, the majority of which it owns.
If investors can ignore or perhaps rather manage the debt that comes with Air India, they will find a lot of prospects. While there are also issues with Air India, including old cabins, hefty domestic competition, and a large workforce, resolving these issues could bring Air India out of its financial woes.
Do you think that Air India will find a buyer by August 31st? Let us know your thoughts in the comments.