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UAE carriers unlikely to bid for Air India

UAE-based airlines are unlikely to acquire any stakes in Air India, following a decision by the Indian government to allow foreign investors to own up to a 49 per cent stake in the airline, UAE media reports said. But neither Emirates nor Etihad commented on the latest decision by the Indian government.

In a statement on Wednesday, the Indian government cleared a proposal that would pave the way for global airlines to bid for the state-run carrier. This brings Air India in line with the country’s other local airlines, in which foreign investment is allowed.

And while UAE-based airlines have long described the Indian market as being highly lucrative due to strong passenger traffic between the two countries, Emirates and Etihad Airways are unlikely to bid for any stakes in Air India, according to previous comments from the airlines.

Tim Clark, president of Emirates airline, has repeatedly stated that “equity [stakes are] not on the table,” and that the Dubai-based airline is interested in organic growth rather than growth through acquisitions.

Etihad Airways, whose previous chief executive led the company to a loss-making strategy of investing in foreign carriers, is currently doing a U-turn on that strategy.

During the Dubai Air Show in November, Peter Baumgartner, Etihad Airways’ top executive, told newsmen that the carrier will not continue to invest in various airlines across the globe.

“No, we certainly are not on the lookout for [airline stakes] for the next investment opportunity,” he said at the time.

Etihad also already has a code-share deal with India’s Jet Airways.

The move to allow foreign companies to invest in loss-making Air India comes after Indian Prime Minister Narendra Modi’s cabinet gave the go-ahead last year to sell the carrier. This followed attempts by the government to keep Air India going, having spent billions of dollars to do so. The carrier has a debt of $8.5 billion.

But though UAE’s largest carriers may not be interested in a bid, other carriers elsewhere are examining that option. Indian carrier IndiGo, Tata Group, and Turkey’s Celebi Aviation Holdings have expressed an interest in buying some of Air India’s businesses.

— With additional inputs from Reuters

via GN