EY to help release expression of interest to accelerate Air India divestment

28 May 2019 Consultancy.in 2 min. read
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Global professional services firm EY remains in charge of the divestment process for Indian public sector airline Air India, and the firm’s latest task is to prepare and expression of interest as soon as possible to accelerate the sale. This is according to sources in Air India’s senior ranks.

The Big Four accounting and advisory firm was brought on board to handle the divestment of Air India at the end of 2017 – alongside investment banking firm Rothschild – to advise on the transaction. One of India’s biggest law firms Cyril Amarchand Mangaldas, meanwhile, was brought on board to offer legal advice on the transaction.

Air India turned to the team of advisory firms after an extended period of financial turmoil, which began more than a decade ago when the firm merged its operations with its domestic iteration – Indian Airlines. Profits dried up immediately for the airline, and substantial debt began to accumulate.

By 2017, when EY was brought on board, Air India was in debt of more than Rs.52,000 crore. The decision was made to sell the airline, and EY has now been instructed to issue an expression of interest (EOI) as soon as possible for the divestment of government shares in the airline.

EY to help release expression of interest to accelerate Air India divestment

Senior executives at Air India have indicated that the accounts for the financial year 2018 – 2019 will be closed and the financial data will be brought up to date in service of the EOI. EY will remain on board as the transaction advisory firm for entire duration of the divestment process.

Conditional to approval from the Union Cabinet, the EOI will accelerate the entire disinvestment process, following which EY is set to receive its compensation for the project. The new impetus being given to the project is a result of instructions from the Prime Minister (PM) to conclude the process at the earliest possible date.

The PM’s directive was forwarded straight to the Aviation Ministry, at which point the Secretary of Civil Aviation Pradeep Singh recommended to Air India that it conclude its divestment by June this year. Given the importance of up to date accounts for the sale, the directive also suggested closing the accounts.

EY is now tasked with overseeing the process, which has proven to be a challenge up until this point, given that the private sector has indicated meagre interest in the airline. EY is simultaneously engaged in auditing the finances of Jet Airways, another Indian air carrier that is in considerable financial turmoil.