Owing to the coronavirus pandemic and its impact on the economy, the government has extended the bidding deadline for national carrier Air India by two months.
The original expectation was the government could collect the funds by April if not in the previous fiscal itself. However, the pandemic and the unforeseen economic disaster it is going to leave in its wake could have injected an element of uncertainty in the disinvestment process as well.
The government notification on the extension of the bidding deadline mentions that this is being down on the express request of the interested bidders. The date for intimation to qualified bidders has also been extended till June 14.
The process of divesting 100% of the government’s equity in Air India was set in motion on January 27, 2020.
Making matters worse is that following the cancellation of international flights across the world, many airlines are looking down the barrel and fears have been expressed that many would go bankrupt with the continued lockdown and cancellation of flights. The airlines will have to keep paying the aircraft lease dues and salaries to their employees both of which constitute a huge part of their fixed expenses and they will report zero revenue. There are some minimal cargo flights being operated to carry essential articles like medical supplies. At a time like this, which airline will want to invest and buy Air India?
Meanwhile, the government had earlier extended the bidding deadline for Bharat Petroleum Corporation Ltd as well, till June 13. On offer is 52.98% stake of the oil state-run major.
Realizing the maximum amounts from the disposal of the two entities Air India and BPCL is very important for the government at this stage.