Air-India has appointed A F Ferguson as advisor for roping in a strategic partner for Air-India Air Transport Services Ltd -- the flag carrier's ground services division which has been hived off into a separate subsidiary recently.
Air-India will dilute a 49 per cent stake in favour of the strategic partner. The carrier intends to float a global tender inviting potential investors. Confirming the development, an Air-India source said, "The consultant will design modalities for roping in a joint venture partner who will be offered 49 per cent equity in the company."
The move, according to airline industry sources, assumes significance, as this is a pointer to the partial privatisation of Air-India's non-core operations at a time when the privatisation of the national carrier has been put on the backburner.
Air-India, on the other hand, considers this as an initiative towards cutting costs. The airline executives said that it is in line with a well-defined strategy towards focusing on its core business: operating flight services.
Air-India Air Transport Services undertakes ground-handling services for domestic and international carriers. With this, it will account for more than 80 per cent of ground services in the country.
The airline has also decided to hive off its engineering division into a separate company -- Air-India Engineering Services Ltd. It will also be diluting a 49 per cent stake in its engineering arm to a strategic partner. A similar spin-off strategy has been adopted for its over Rs 500 crore (Rs 5 billion) cargo business and its information technology services. The idea, according to the senior executives in the company, is to convert each of these non-core operations into separate profit centres.
A-I intends to generate incremental revenue by undertaking third-party work for various airlines through these service oriented business outfits.
