India fails to sell its National airline Air India during an auction

India has failed to sell its ailing national airline. This years' Govt.economic priority is to sell Air India and after failing, it could be privatized other state-owned companies.

Bidding of the Airline closed when no buyer came forward for it to own.

image source

The Indian Ministry of Civil Aviation said on its official Twitter account, "As informed by the Transaction Adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India. Further course of action will be decided appropriately."

Last year, the government put Air India on the auction block and offered bidders the chance to buy 76%. It wants to scale back taxpayer support for an airline that has lost money for years. The deadline of the auction had already been extended in a hope that a buyer may come forward.

The future of the indebted carrier is now very uncertain-Despite its losses and growing competition from budget carriers such as SpiceJet and IndiGo, Air India is still a major player in an aviation market that is projected to be the world's third-biggest by 2026.

"But buyers were put off by Air India's enormous debts -- more than $7 billion. The government wanted the new owner to take on $5 billion of that.

The Center for Asia Pacific Aviation (CAPA), an aviation consultancy, estimated that Air India could lose another $2 billion in the next two years."

Analysis: Why no one wants India's national airline?

Any international bidders would have had to find a local partner because regulations prevent foreign firms from owning more than 49% of an Indian airline.

Analysts say the government may have to sweeten the terms if it wants to have another go at offloading Air India, which still accounts for around 17% of all India's international traffic. It carried almost 19 million passengers during the last fiscal year.

CAPA (Corrective and preventive action) says privatization may be the carrier's last hope.

The organization said in a recent note, "If the divestment process is not executed successfully, the airline could possibly close unless the government has the appetite to use billions of dollars of taxpayer funds".

by Soniya Kaur | Sat, Jun 02 - 12:39 PM

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