IndiGo withdraws from Air India negotiations
Indian low-cost carrier IndiGo announced on April 5, 2018, backing down on becoming a candidate to buy out Air India, because of unsatisfactory conditions from the government, it claims.
“From day one, IndiGo has expressed its interest primarily in the acquisition of Air India’s international operations and Air India Express. However, that option is not available under the Government’s current divestiture plans for Air India,“ said Aditya Ghosh, President and Whole Time Director.
IndiGo was expected to make an offer, as it could acquire certain slots which were previously almost impossible to get. Last year, the company had already expressed its ambitions in an investor conference.
But it seemed that IndiGo is now afraid to bite off more than they can chew. Ghosh said: “Also, as we have communicated before, we do not believe that we have the capability to take on the task of acquiring and successfully turning around all of Air India’s airline operations.“
On March 28, 2018, the Indian government announced intention of selling 76% shares of the national carrier Air India. With the stake acquisition also comes a debt assumption of $5.1 billion.
The government had been bailing out the company but never managed to make it profitable. It received a public investment of around $4 billion in the last five years. Three of the six subsidiaries from Air India are in deficit.
The upcoming sale also concerns 100% of the low-cost subsidiary Air India Express, and 50% of the ground management company Air India SATS. However, the government will keep the rights over the brand Air India and at least 51% of the carrier capital should be controlled by an Indian organization.
Potential bidders have until May 14, 2018, to submit their offers.
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