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Air India might shutdown if disinvestment fails.

NEW DELHI -- National passenger carrier Air India might shut down, if its ongoing divestment programme fails due to the terms and conditions set in its 'Express of Interest' (EOI) document.

According to aviation consulting firm CAPA India, it is critical for the central government to amend the labour and debt conditions for the divestment process to succeed.

'Three key themes emerging on @airindiain divestment: 1) Critical that terms in EOI - particularly for labour and debt - are amended, as successful bidder will need to invest in restructuring and absorbing losses for several years, in addition to consideration paid for 76 per cent,' the consulting firm tweeted on May 4.

'Three key themes emerging on @airindiain divestment: 2) Unless bidders confident that they will be ring-fenced from possible political risks if successful, this could prove to be a key reason for possible non-participation by some parties at RFP stage. #indianaviation 2 of 3.' (sic)

Besides, the firm said that it estimates AI headed for '2-year losses of USD1.5-2.0 bn in FY19/FY20'.

The development comes few days after the central government extended the submission deadline for the EOI bids under Air India's divestment process to May 31, 2018.

The 'Corrigendum' issued by the Ministry of Civil Aviation on May 1 extended the last date for EOI bid submission to May 31, 2018 from May 14.

Consequently, the date for the 'intimation to the Qualified Interested Bidders' (QIB) has also been extended to June 15 from May 28.

In addition, the ministry issued a separate document on clarifications sought by interested bidders regarding the divestment process.

On the total debt and liabilities which are expected to remain with AI at the point of divestment, the ministry clarified: '... As on 31st March 2017, including net current liabilities of INR 88,160 mn, aggregating to INR 333,920 mn will remain with AI and AIXL (no change for AI-SATS except in normal course of business).'

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Publication:The Frontier Star (Northwest Frontier Province, Pakistan)
Date:May 7, 2018
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