Air India's new owners to inherit planes, prime slots, and $5 bn of debt

India is selling a controlling stake in its flagship carrier along with two-thirds of the loss-making airline’s about $7.8 billion debt, as Prime Minister Narendra Modi moves ahead with the nation’s most high profile asset sale in decades.
The government will sell 76 percent of Air India Ltd., according to a document uploaded on the civil aviation ministry’s website on Wednesday. The airline’s overseas budget carrier will be completely sold in the offer, while the state will sell a 50 percent stake in the ground handling unit separately. The administration may also ask the buyer to conduct an initial public offering.

A successful sale of Air India, which is surviving on taxpayer-funded bailouts, is seen as test case for Modi to burnish his credentials as a reformist attempting to steer the state away from running businesses and boost spending on health and education. The national carrier has five subsidiaries, a joint venture and a combined workforce of as many as 27,000.

“Selling a 76 percent stake is the second-best option for the government; the best option would have been to exit completely,” said Kapil Kaul, South Asia CEO at CAPA Centre for Aviation, “There’s also a caveat there that the acquirer will have to list the company, which means the government is looking at exiting through an IPO route, which is fair enough and very positive.