Air India is up for sale — for the second time in as many years.

On Monday, the Narendra Modi government invited expressions of interest (EoIs) from bidders who were ready to stump up money for a 100 per cent stake in the 87-year-old national carrier along with two other subsidiaries: low-cost carrier Air India Express and Air India SATS Airport Services, in which AI has a 50 per cent stake.

Queries can be submitted till February 11 while the last date for submission of EoI is March 17. The qualified bidders would be intimated on March 31.

Back in 2018, there were no bidders for Air India when the government had offered to sell a 76 per cent stake. Bidders were wary about how much control they would have and the prospect of taking on a Rs 49,000 crore debt burden.

This time the government has sweetened the terms: it has offered the entire stake, cut the minimum networth criteria to Rs 3,500 crore from Rs 5,000 crore earlier and slashed the debt burden on the airline to Rs 23,286.50 crore in the two airlines.

Special investment funds are also allowed to bid. These funds must have available capital for investment of Rs 3,500 crore, again reduced from Rs 5,000 crore in 2018.

The government has also dropped the profitability criterion: earlier, the bidders had to have a positive profit after tax in three of the preceding five years.

Scheduled airline operators in India have been offered special relief. They can bid even if they have a negative net worth and can piggyback on the balance sheet of an affiliate — an entity in which the operator has more than 50 per cent of the voting rights.

A one-year lock-in period has been set for bidders during which there can be no change in the shareholding structure of the consortium from the close of the transaction.

Fresh issue of shares in Air India is possible during the lock-in period, but the shareholding structure must stay the same.

Air India has an overall debt of more than Rs 80,000 crore, which means that the bidder is being asked to bear about a fourth of the existing burden. The remaining debt will be allocated to Air India Assets Holding Ltd (AIAHL), a separate company that will house all the other assets of the Air India group: Air India Engineering Services, Air India Air Transport Services, Airline Allied Services, and Hotel Corporation of India.

A consortium can participate in the disinvestment process, provided each partner has at least a 10 per cent stake as well as 10 per cent of the Rs 3,500-crore net worth requirement.

The lead member of a consortium should have at least a 26 per cent stake. Individuals are allowed to bid as part of the consortium.

Substantial ownership and effective control of the airline must remain with an Indian entity. The current FDI norm allows foreign carriers to own 49 per cent, which will apply for Air India.

The provision to bid on the strength of the net worth of affiliate companies has been extended only to foreign entities and not to Indian scheduled airline operators.

Praveen Sahay, deputy vice-president (equity research), at Edelweiss Broking, said, “One reason why the deal may not go through is that investors may find it difficult to gulp the entire piece at a go. A sale done in parts is more feasible.”

Unions meet

The internal mechanism panel, comprising members from both the Air India management and its trade unions, met for the first time in New Delhi to discuss various employees-related issues ahead of the carrier’s proposed privatisation, a source said.