The Indian Government has issued a call for Expressions of Interest (EOI) in a 76% stake in Air India Limited as well as two other assets.

A statement issued by the Ministry of Civil Aviation on March 28 said the sale would include Air India Express (IX, Mumbai Int'l), which is a wholly-owned subsidiary of Air India, as well as its 50% stake in Air India SATS Airport Services (AISATS), which provides groundhandling services at Delhi Int'l, Hyderabad Int'l, Bangalore Int'l, Trivandrum, and Mangalore.

The tender underscored that Air India's other wholly-owned subsidiaries Air India Engineering Services Ltd (AIESL), Air India Air Transport Services Limited (AIATSL), Alliance Air (India) (9I, Mumbai Int'l), and the Hotel Corporation of India (only 80.3% owned by Air India Ltd.) would not be part of the sale as they are in the process of being transferred to a separate special purpose vehicle (SPV).

Qualified Interested Bidders must have a minimum net worth of INR50 billion rupees (USD772 million) and must show they are Positive Profit After Tax (PPAT) in at least three of the immediately preceding five financial years from the EOI Deadline (May 14, 2018).

However, if a consortium is bidding and one of its members is an Indian scheduled carrier, then the condition to meet PPAT will not apply to such member provided their shareholding in the consortium is restricted to a maximum of 51% of paid-up equity share capital of the consortium's SPV.

In case of a foreign airline (i.e. airline which is not a Scheduled Airline Operator in India), the requirement to meet positive profit after tax requirement shall remain applicable.

The successful bidder will assume INR333 billion rupees (USD5.1 billion) worth of debt with the balance to then be allocated to Air India Asset Holding Limited which is 100% owned by the Government of India. Details of the debt/liabilities reallocation will be disclosed at the RFP stage.

The deadline for submissions is May 14 following which those successful applicants will be informed on May 28.

Ernst & Young LLP India is the transaction advisor.