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Air-India's new strategic partner to be named by May

The Indian government is to name by May which bidder it has chosen to acquire a 40 per cent stake in state-owned international carrier Air-India, an airline official said Monday.

"According to Air-India's global advisor, the whole process is likely to be complete by the middle of May," a senior Air-India official said.

He said the final choice of a partner was expected to be narrowed down by March-April.

At least six bidders are in the race for Air-India including Tata-Singapore International Airlines, India's Hinduja business family, the London-based Indian steel magnate L N Mittal and an Indian Pilots' Guild.

"The number of bidders is definitely more than six," the official said.

He said Air-India would unveil a business plan to bidders aimed at accelerating the airline's growth, including the need to buy new airplanes to boost its dwindling market share.

"The business plan will not only project the kind of growth required for the airline, but also outline what needs to be done to make up for lost opportunity," the official said.

The airline has an ageing fleet of 23 aircraft and in the last two years has been forced to suspend operations on key routes to Europe because of dropping profitability.

The sale of Air-India's subsidiary, the Hotel Corporation of India, is also likely to be completed by the end of March to generate more cash, the official said.

A Tata group spokesman said the firm was bidding for a stake in both Air-India and domestic carrier Indian Airlines.

An attempt by Tata and Singapore Airlines to launch a domestic airline several years ago flopped in the face of stiff resistance by Indian Airlines, which feared the competition could kill its operations.

A spokesman for British Airways said the airline, along with Australia's Qantas, would act as technical advisors to L N Mittal.

The Hinduja group told reporters it would also form an alliance with a foreign airline at a later stage.

The Indian government is to sell a 60-per cent stake in Air-India, which has piled up losses of Rs 10 billion ($230 million).

Forty per cent will be sold to a "strategic investor" -- which would include a maximum 26 per cent stake for a foreign airline -- and 20 per cent to employees and financial institutions.

New Delhi has not estimated Air-India's net value but airline sources say the 40 per cent stake would go for around Rs 60 billion ($1.4 billion).

The government also plans to sell 60 per cent of ailing Indian Airlines.

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