Air India Bidders Receive Indemnity From Legal Claim

  • Airlines

The Indian government has offered the two bidders of Air India indemnity over a legal claim it faces once it becomes a private carrier. The decision comes as Cairn Energy filed cases to seize Air India assets around the globe after winning a $1.2bn arbitration award. The government is hoping to avoid delays in the Air India sale due to Cairn and other company’s claims and is offering to protect the airline’s new owners.

Air India could be at risk of losing its aircraft, offices, and other assets abroad if the cases go through and the government can’t reach a settlement. Photo: Vincenzo Pace | Simple Flying

Protect

According to Bloomberg, India is planning to pass a proposal to indemnify the new owners of Air India from legal claims from Cairn Energy. This will ensure that the Tata Group or SpiceJet, whichever wins the bid to take over the airline, do not have to pay any penalties associated with the case in the future too.

Cairn’s case has come up as a sticking point during the negotiations to purchase Air India. The energy firm has sued Air India in the US and several EU countries and argued that it should be able to seize the airline’s aircraft and other assets to fulfill a $1.2bn arbitration award it won last year. With a chance of aircraft seizures, the bidders have swiftly asked for indemnity from any possible legal troubles.

In February, Air India began preparing for possible aircraft seizures at its international destinations. Photo: Vincenzo Pace | Simple Flying

The Indian government, which has been trying hard to sell Air India, has moved to offer indemnity to the bidders. The final approval for the plan should come in the coming weeks and is all but likely to pass before ministers.

Working

While the government is offering financial protection to Air India’s new owners, it is also working hard to resolve the dispute. Cairn has been in contact with India to settle the dispute and avoid public trials and seizures of assets. India is also facing other legal challenges due to losing tax awards, creating a major headache for Air India.

Cairn has argued in court that Air India is an alter ego of the government itself, which means its assets can be seized to pay for the award. While no action has been taken against the airline yet, there is precedence for such a move. A Pakistan International aircraft was seized in Malaysia in January due to unpaid dues to a lessor in the UK.

For now, protect the Air India bidding process is a key goal for the government. Financial bids will come in by 15th September, according to Civil Aviation Minister of State V.K. Singh. This means the airline will be in private hands by the end of the year or Q1 of 2022. After years of trying and failing, Air India will hopefully leave government hands very soon.

What do you think about the government’s decision to award indemnity to Air India’s buyers? Let us know in the comments!