Air India to hire law firm for assessing labour issues, business contracts

Air India. Photo: Mint

National carrier Air India has invited bids from law firms to assess labour issues, possible liabilities arising out of litigation and group companies’ contracts with various business partners ahead of disinvestment in three of its entities—Air India Ltd., Air India Express Ltd. and Air India SATS Airport Services Pvt. Ltd. (AISATS).

The due diligence will cover a range of issues such as existing arrangements with employees, employee benefits and labour disputes along with Air India group’s contracts with a host of business partners valued above 50 crore, including aircraft lease and fuel supply arrangements. It will also cover all legal disputes against the carrier or initiated by it and highlight the probable liabilities in these cases, according to a document requesting proposals from law firms with experience in mergers and acquisitions on the airline’s website.

The last date for submitting financial and technical bids is Friday. Conditions stipulate that interested bidders should not have been engaged by any airline or any other agency for acquisition of Air India or its assets to avoid any conflict of interest.

The due diligence will provide better clarity to potential investors about the airline, a fact that will have a bearing on the financial bids.

Air India Express is the national carrier’s fully owned low-cost airline with a fleet of Boeing 737 aircraft. AISATS is a joint venture providing ground and cargo handling services. The government had last year offered 76% stake in Air India Ltd. along with 100% stake in Air India Express Ltd. and 50% in AISATS, but drew a blank.

The government is keen to complete the divestment of its stake in the national carrier this financial year ias it could help it meet the 1.05 trillion divestment target for the fiscal. Officials are now working on giving a final shape to the document inviting expressions of interest from investors for the stake sale. A core group of secretaries led by cabinet secretary Rajiv Gauba had on Thursday discussed the issue.

The effort now is to make sure that the terms of sale are such that the national carrier becomes an attractive asset that an investor can take over, turnaround and operate efficiently in a highly competitive air travel market.


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