Nicholas Ionides SINGAPORE
South Asian airline privatisation plans have been hit after a number of key airline contenders for a stake in Air India dropped out of the running and Bangladesh was forced to push back plans to sell a stake in Biman Bangladesh.
The Indian Government was faced with the bad news on 23 February, the closing date for "technical bids" to be received for Air India. Only two groups have confirmed that they remain in play. These are the two Indian conglomerates, the Hinduja Group and Tata, in consortium with Singapore Airlines.
Air France and Delta Air Lines dropped out of the bidding after failing to form a consortium with potential partner Indian Tobacco. KLM, SAirGroup and Emirates have also said they are not interested.
Lufthansa had been seen as a potential bidder but says it has no plans to take an equity stake. Lufthansa Consulting is, however, acting as technical adviser to Hinduja, which is seeking a stake in both Air India and Indian Airlines.
The Indian Government says it is still committed to a sale. Remaining candidates can now carry out due diligence, after which binding bids will be sought in the hope that the sale can be completed in June.
Up to 40% is available to a strategic partner, 26% of which can be taken by foreign concerns. Domestic institutions and airline staff are to be offered another 10% each.
Indian Airlines is also set to be partially privatised by mid-year, however, unlike the Air India plan, bidders are restricted to domestic companies, non-resident Indians and foreign companies owned by expatriate Indians.
Meanwhile, a target date for the completion of Biman Bangladesh's partial privatisation has slipped by four months and a new deadline for the sale of 49% has been set at 30 June.
Biman's board met late in February and pushed the completion target back from 28 February. Although no reason is given for the delay it is almost certainly because of a lack of interest.
The carrier formally began searching for a foreign strategic partner late last year through international advertisements and targeted the end of February for a deal to be completed after pushing back an original target of 31 January.
The partial privatisation is due to see 9% of the airline sold to employees and 40% to an international carrier or carriers. The carrier had said that Singapore Airlines, Air New Zealand, Qatar Airways and Gulf Air expressed an interest in taking a stake. The state will retain 51%.
Biman has been assisted in its privatisation planning by investment bankers Citibank and Salomon Smith Barney, as well as strategic aviation consultancy Simat, Helliesen & Eichner and legal firm Clifford Chance.
Source: Airline Business
