The government is looking to raise nearly ₹3,000 crore in FY24 by selling engineering and ground handling companies that used to be part of Air India Ltd. AI Engineering Services Ltd (AIESL) and AI Airport Services Ltd (AIASL) are expected to be the most profitable among the five subsidiaries of Air India and the move is likely to attract a lot of potential bidders. AIESL, the biggest company in India’s maintenance, repair, and overhaul (MRO) sector, earned ₹844 crore in net profit in FY22, while AI Airport Services generated ₹15.4 crore.
Tata Group has acquired Air India and Air India Express in January 2022, but the remaining four companies are still held by the government. For these companies, the government has created a special purpose vehicle named Air India Assets Holding Ltd (now renamed AI Asset Holdings Ltd after divestment). AIESL and AIASL are expected to fetch ₹1,800-1,900 crore and ₹700-800 crore respectively.
The government is also eying the sale of Alliance Air, a regional carrier among the five subsidiaries of Air India, but the time might not be right yet given the consolidation and cost restructuring underway in Indian aviation. Alliance Air is expected to fetch around ₹250 crore. Further, the government is set to monetize the iconic Nariman Point building in Mumbai, Vasant Vihar colony in Delhi, and a large plot measuring 14,326 sq. m at Baba Kharak Singh Marg in Delhi for the Air India divestment.
The Tata Group is among the front-running contenders for acquiring AIESL due to its narrow-body and wide-body fleets. AIESL provides engineering services to around 450 aircrafts in a year. Air India managing director Campbell Wilson said the fact that AIESL vanished from Air India divestment was a “negative surprise” and the airline had to start building up its own capabilities from day one. The disinvestment proceeds will go to AI Asset Holdings to service interest payments and settle the working capital of Air India.
