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Air France to have another go at Air India

Air France may again be moving to acquire a stake in Air India, in which the government is selling a 40 per cent stake to a strategic partner, a financial daily reported on Friday.

The daily, quoting unnamed industry sources, said Air France chief executive Jean-Cyril Spinetta will visit New Delhi next week, and is scheduled to meet Indian divestment secretary Pradeep Baijal and Civil Aviation Minister Sharad Yadav.

The report said Spinetta, who will be accompanied by Air France vice president Dominique Perit and other senior airline staffs, is officially coming to India to attend a reception to bid farewell to the general manager of the French air carrier's local unit.

But the other meetings pointed to Air France exploring the possibility of rejoining the competition to acquire a stake, accompanied by management control, in money-losing Air India.

Air France had initially declared an intention to bid, in partnership with Atlanta-based Delta Airlines, the third-largest US airline, for the Indian international flag carrier, which has lost money the past seven years.

But Air France was forced to abandon the pursuit after failing to attract Calcutta-based ITC, India's largest cigarette maker, to join its bidding consortium.

Under bidding terms set by the government, New Delhi has offered to sell a 26 per cent stake to a foreign airline, and 14 per cent to a domestic partner.

"Air France is looking at a situation where a re-bid for Air India gives the Paris-based company another chance," the newspaper said.

"A re-bid with a different set of rules could open the doors for Air France, officials of the company feel," the report added.

Only two groups submitted technical bids by the February 23 deadline. One group combines regional powerhouse Singapore Airlines with the Tata Group, one of India's largest industrial groups.

The other bid was tabled by the London-based billionaire Hinduja brothers.

The Hindujas face charges in India for bribery in connection with the sale of military equipment to the Indian government, and could still be disqualified from buying Air India, the report said.

In that case, the government could find it difficult to proceed with the sale as only one bidder would remain, strengthening the position of critics of the government's privatisation programme.

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