Retaining Air India Employees Will Diminish Its Bid Value

The bid value of Air India will fall if the government asks buyers to keep the airline's employees on payroll, according to Turkish firm Celebi, which has expressed interest in buying a subsidiary of the disinvestment-bound national carrier.

Celebi, which offers ground-handling services, had written to the ministry of civil aviation last year expressing interest in the national carrier's ground-handling subsidiary, the Air India Air Transport Services Limited (AIATSL).

Celebi's expression of interest came months after the Cabinet Committee on Economic Affairs approved the disinvestment of the national carrier and appointed a group of ministers to chalk out a strategy for the stake sale.

The AIATSL has a presence across 60 destinations in the country and the Celebi hopes buying the AI subsidiary will help it achieve a wider penetration in the domestic aviation market in India.

Celebi's CEO for India, Murali Ramachandran, explained that there are other areas that the company needs a clarity on, such as Air India's future value.

Also Read: Air India's Operating Profit More Than Doubles To Rs 298 Crore In FY17

Celebioglu said that if her firm wins the bid for AIATSL, it may take 5-10 years for the two companies to integrate fully.

"AI business is a very big chunk, which means you need to spend time, maybe 5-10 years. We need to adjust the existing company (AIATSL) to our standards. At the moment, they have their own way of training, dealing with their personnel and we have our own standards," she said.

The AIATSL has approximately 8,500 employees, according to its annual report for FY 2015-2016.

The Celebi currently offers ground-handling services at the Mumbai's Chhatrapati Shivaji International Airport and the Delhi's Indira Gandhi International Airport. It also provides cargo and warehouse services at the Delhi airport.

Apart from Turkey, it is also present in Hungary, Germany, Austria.

Ground-handling services include aircraft cleaning and servicing, loading and unloading of food and beverages, besides cargo and luggage handling at the airports. Celebi's operations in India account for 30 percent of its total business globally, according to Ramachandran.

The government expects to complete the disinvestment of Air India by year-end and at least 51 percent of AI's ownership will be transferred to a private player.

According to Minister of State for Civil Aviation Jayant Sinha, the national carrier would be offered for bidding as four different entities.

Air India, its low-cost arm Air India Express and subsidiary AISATS would be one entity while regional arm Alliance Air would be a separate entity.

Besides, Air India Air Transport Services Ltd (AIATSL) and Air India Engineering Services Ltd (AIESL) would be sold separately. The government is expected to float the tender for Air India's sale soon.

Also Read: Air India Draft Tender Lists Four Options For Government Ownership