IndiGo, Etihad evince interest in Air India, says report

Quoting an anonymous official, the ET report said "these two companies and a couple of private equity investors" have shown interest in Air India.

Among the two, the current foreign direct investment (FDI) regime prohibits a foreign carrier such as Etihad to directly own more than 49 percent, but IndiGo can bid 100 percent for Air India.

But FDI norms allow 100 percent foreign investment in an airline, which means Eithad can bid for 100 percent stake either by tying up with Abu Dhabi Investment Authority or National Investment and Infrastructure Fund, the report said.

Etihad owned 24 percent in Jet Airways until recently but decided against funding the financially beleaguered airline, leading to its grounding in April this year.

After failing to receive any bid in its first attempt to sell Air India, the government has offered several relaxations this time, such as 100 percent stake in the airline, substantial restructuring of debt and liabilities and allowing the new owner to offer VRS to employees.

The government will clear Air India's dues amounting to Rs 22,000 crore to vendors scuh as airports and oil companies before the sale, the report said. It may also Air India's entire working capital debt of about Rs 15,500 crore, so that Air India is left with a loan burden of about Rs 20,000 crore, the report added.

Air India will be offered along with low-cost international subsidiary Air India Express as well as its 50 percent stake in ground-handling company Air India Singapore Airport Terminal Services, the ET report said.