Gulf airline major Etihad is planning to bid for state-owned carrier Air India. Etihad is looking for partners in major Indian corporate groups and has sent feelers to Anil Ambani-owned Reliance group (ADAG).
The Union government has invited expression of interest from private players to buy 76 per cent in the national carrier. The sale includes 100 per cent in subsidiary Air India Express and 50 per cent in ground handling joint venture AISATS.
Sources aware of the discussions said talks were at a preliminary stage. “Etihad is scouting for partners to form a consortium to bid for Air India and is in discussion with companies, including the Anil Ambani group,” a source said. There are chances that the talks may not translate into a partnership, but this indicates interest of foreign aviation firms and India Inc in the airline.
According to sources close to the transactions, several global airline majors such as British Airways and Singapore Airlines are evaluating investment prospects in Air India and looking for suitable partnership for the deal.
If the partnership works, this will be Etihad’s second investment in an Indian airline.
In 2007, it had bought 26 per cent stake in private airline Jet Airways.
“Relations with Jet Airways are not at an optimum level following Jet’s deepening of partnership with Air France-KLM. But Etihad will not let its hold in the Indian market go, so it is evaluating the opportunity,” another source said.
According to the agreement signed last November, the joint venture between Air France-KLM and Jet Airways is meant to share passenger traffic revenue on the India-Amsterdam and India-Paris routes. In an advanced form of commercial partnership, this will also involve closer tie-ups in sales and marketing, including common corporate and travel agency contracts.
Media reports indicate Anil Ambani had earlier explored opportunity to start an airline on his own or through investment in an existing carrier.
Queries sent on Wednesday to Reliance and Etihad did not elicit any response till the time of going to press on Thursday night. However, a source in the Reliance group said it was unlikely that the group would bid for Air India given its precarious financial conditions. At a time when the financials of the group are not strong, it may not get into a new stream of business, he said.
Aviation consultancy firm CAPA said Etihad would soon sell its stake in Jet Airways. The two carriers had, however, denied any such steps.
The government had mandated certain net worth conditions for becoming eligible to bid for Air India. The Anil Ambani group, despite suffering huge losses, qualifies the eligibility criteria.
The sale of Air India was off to a slow start with two listed domestic airlines ruling out bidding for it.
While IndiGo expressed its inability to acquire Air India’s domestic operations, Jet Airways cited high debt of the airline as the possible reasons for staying out of the race.
Source: Business-Standard