Mumbai: The government will shortlist qualified bidders for Air India by 15 June and set a reserve price for the national carrier by June end, two people familiar with the matter said. The intention is to complete the sale of a 76% stake in the airline before the end of the financial year.

“The government will commence the second stage of Air India divestment immediately after 15 June," said one of the two people mentioned above, both of whom spoke on condition of anonymity.

“The reserve price will be set immediately after the bidders are shortlisted," this person said, adding this is likely by end of June.

The government on 1 May extended the privatization process of Air India by a fortnight and clarified various knotty issues identified by potential bidders. The last date to submit expressions of interest (EoIs) was extended till 31 May from the previous deadline of 14 May. Qualified bidders would be announced on 15 June, against the previous date of 28 May, the government said through a corrigendum issued to the EoI document.

According to guidelines set by the department of investment and public asset management, strategic divestment is conducted in three steps: (1) inviting EoIs and qualification of potential bidders; (2) request for proposal (RFP) and submission of bids; and (3) completion of the transaction. “The government received 160 queries from interested bidders, which shows that there’s a lot of interest on Air India. Several parties have hired lawyers and are examining the government’s offer. However, it’s yet to be seen how many such interests translate into bids," said the second of the two people quoted above.

The government plans to sell 76% in Air India along with management control. It will have no special rights in the airline despite retaining a 24% stake. “The government is very serious about selling the airline by the end of the fiscal 2019," said the first person quoted in the story. “They (government) don’t care about upcoming elections to sell Air India," the first person added.

“The government will eventually exit the airline by selling its remaining stake, a few years after the divestment, after the airline has been revived and made profitable by a private party or consortium," this person added. Recently, IndiGo and the Tata group opted out of the sale, prompting calls for a rework of the terms and conditions in the disinvestment process. SpiceJet chairman Ajay Singh recently told Mint that the current terms and conditions to buy Air India has discouraged some prospective buyers from showing interest and if they can be tweaked, the state-owned carrier will witness wider interest. Air India, however, is too big for SpiceJet to buy, he added.

“Terms and conditions for Air India sale will not get modified, though further clarifications (on terms and conditions) could be allowed in the second stage of the divestment process," said the first person quoted above.

Aviation consultancy firm Capa India had in its India Aviation: Outlook for FY 2019 said that up to four Indian carriers and two non-airline companies (India) could be interested in acquiring Air India.

“Acquisition by an Indian carrier could breach anti-competitive market share threshold on domestic routes," Capa (India) said, adding, “Raising capital to fund the acquisition at high valuation could be challenging for most Indian carriers."

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