NEW DELHI: India is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said.
Prime Minister Narendra Modi’s Cabinet gave the go-ahead last month for the government to try to sell the airline after successive governments spent billions of dollars in recent years to keep the airline going.
Air India — founded in the 1930s and known to generations of Indians for its Maharajah mascot — is saddled with a debt burden of $8.5 billion and a bloated cost structure. The government has injected $3.6 billion since 2012 to bail out the airline.
Once the nation’s largest carrier, its market share in the booming domestic market has slumped to 13 percent as private carriers such as InterGlobe Aviation’s IndiGo and Jet Airways have grown.
Previous attempts to offload the airline have been unsuccessful. If Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country’s most intractable problems.
His office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named, as they were not authorized to speak publicly about the plans.
The timeline is ambitious and the process fraught, with opinion divided on the best way forward: Should the government retain a stake or exit completely, and should it risk being left with the unprofitable pieces while buyers pick off the better businesses, officials said.
Already, a labor union that represents 2,500 of the airline’s 40,000 employees has opposed the idea of a sale even though it is ideologically aligned to Modi’s Bharatiya Janata Party (BJP).
Officials who have to make it happen are grappling with the sheer scale of the exercise. Air India has six subsidiaries — three of which are loss-making — with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.
No one has properly valued the company’s various businesses and assets before, two officials with direct knowledge of the process said. Earlier this month, about $30 million worth of art, including paintings by artist M. F. Husain, went missing from its Mumbai offices, chairman Ashwani Lohani said.
“The exercise is complex and there is no easy way out,” said Jitendra Bhargava, operational head of Air India in 1997-2010. “At this juncture, selling even part of Air India is far from certain.”
Lohani declined to comment on the sale process. The prime minister’s office and the Civil Aviation Ministry also declined to comment.
A committee of five senior federal ministers, led by Finance Minister Arun Jaitley, is expected to meet this month and begin ironing out the finer details of the plan. Besides deciding on the size of the stake sale, the panel will set the bidding norms. It will also take a call on the carrier’s debt, demerger and divestment of its three profit-making subsidiaries.
Modi’s office has said the government has no business being in hospitality and travel, suggesting the prime minister wants to sell as much of Air India as possible, the officials said.
Analysts say the government may prefer to keep the airline in Indian hands. At least two potential Indian suitors — the Tata Sons conglomerate and IndiGo — have shown early interest.
In recent weeks, officials in Modi’s office and from the Civil Aviation Ministry met Ratan Tata, the patriarch of the $100 billion-a-year Tata Sons, to gauge the company’s interest in a deal, a close aide to Modi said.
Tata would be an attractive buyer for the government. The company founded and operated Air India before it was nationalized in 1953.
“Seems like Tata will come forward and make the best offer,” the aide said, adding the government would be keen to see that jobs are not lost.
Tata, however, already has two other airline joint ventures in India, and it is not clear what parts of Air India it would be interested in. A Tata spokeswoman declined to comment.
IndiGo said on Thursday it was interested in the international operations and in Air India Express, a low-cost carrier.
Modi’s office has told officials to work out exactly how much each of Air India’s subsidiaries is worth to make it easier to break up the carrier if needed, two of the officials said. The government is expected to appoint outside consultants to help with the exercise.
Anshuman Deb, an aviation analyst at ICICI Securities, said splitting the airline would maximize value for the government.
“Let us be realistic. It is very clear that a single buyer cannot buy an entire state-owned company,” said a senior official involved in the process.
Air India break-up an option as Modi pushes for quick sale
Air India break-up an option as Modi pushes for quick sale
Emirati billionaire to invest $20bn in US data centers, Trump says
- Hussain Sajwani promised investment feeds for constructing data centers for developing AI and expanding cryptocurrency
- Investment by DAMAC Properties in the UAE is intended to highlight Trump’s ability to attract new money for big projects
PALM BEACH, Florida: Emirati billionaire Hussain Sajwani promised a $20 billion investment in the booming US data center industry in the coming years, he and US President-elect Donald Trump announced on Tuesday at Trump’s home in Palm Beach, Florida.
With an election victory largely driven by voters’ economic concerns, Trump has doubled down on bolstering investments in domestic industries and proposed higher tariffs on Chinese goods as the US tries to curb China’s access to the chips needed for advanced data centers.
“We’re planning to invest $20 billion and even more than that, if the opportunity in the market allows us,” said Sajwani, chairman of Dubai developer DAMAC, at Trump’s Mar-a-Lago home.
DAMAC owns the Middle East’s only Trump-branded golf course in Dubai, which opened in 2017, and the billionaire celebrated the New Year with Trump in Florida.
Trump has an affinity for announcements promising economic growth, though such investments do not always pan out. Early in his first term, he announced a $10 billion Foxconn investment in a Wisconsin factory that promised thousands of jobs but was mostly abandoned.
Last month Trump and SoftBank Group CEO Masayoshi Son announced the Japanese tech investor would invest $100 billion in the US over the next four years, focused around AI.
The introduction of OpenAI’s GenAI chatbot ChatGPT in late 2022 kicked off a wave of investment in generative AI technology and the pricey infrastructure required to support it, including power generation and transmission.
Microsoft said last week it would spend about $80 billion this fiscal year to ramp up its AI capacity.
Restrictions on the export of coveted AI chips used in advanced data centers to China have tightened under the Biden administration, and Trump has nominated China hard-liners to key diplomatic and economic roles in his administration.
Oil Updates — crude rises on tighter OPEC supply, US jobs data
SINGAPORE: Oil prices rose on Wednesday as supplies from Russia and OPEC members tightened while data showing an unexpected increase in US job openings pointed to expanding economic activity and consequent growth in oil demand.
Brent crude was up 37 cents, or 0.5 percent, at $77.42 a barrel at 10:30 a.m. Saudi time. US West Texas Intermediate crude climbed 44 cents, or 0.6 percent, to $74.69.
Oil output from the Organization of the Petroleum Exporting Countries fell in December after two months of increases, a Reuters survey showed. Field maintenance in the UAE offset a Nigerian output hike and gains elsewhere in the group.
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg reported citing the energy ministry.
On the economic front, job openings rose in the US in November and the number of layoffs was low, while workers were reluctant to quit, the Job Openings and Labor Turnover Survey showed.
“Robust US economic data continues to bolster the outlook for the US economy and oil demand, further supported by a larger-than-anticipated drawdown in crude inventories,” said IG market strategist Yeap Jun Rong.
“After trading within a prolonged tight range since October last year, selling pressures may have been exhausted for now, paving the way for a modest recovery,” Yeap said.
US crude oil stocks fell last week while fuel inventories rose, market sources said, citing American Petroleum Institute figures on Tuesday.
Going forward, analysts expect oil prices to be on average down this year from 2024 due in part to production increases from non-OPEC countries.
“We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024,” BMI, a division of Fitch Group, said in a client note.
“The bearish view is being led by our fundamental data forecast, which points to an oversupply this year, with supply growth outstripping demand growth by 485,000 barrels per day.”
Saudi Cabinet approves new law to regulate petroleum, petchem sector
RIYADH: Saudi Arabia’s Cabinet has approved a new Petroleum and Petrochemical Law to ensure a reliable and secure supply of products within the Kingdom.
The law, which was approved on Jan. 7, is designed to optimize the use of raw materials in the sector and support the localization of the value chain, according to a report by the Saudi Press Agency.
The new legislation will replace the existing Petroleum Products Trade Law and is expected to achieve several key objectives, including regulating petroleum and petrochemical operations. It aims to accelerate the sector’s growth, foster economic development, and encourage increased investment in the industry.
Upon the law’s approval, Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman expressed gratitude to the Cabinet, emphasizing that the law would help establish a robust legislative framework for the Kingdom’s energy sector. He added that the new directive would facilitate the optimal use of petroleum and petrochemical resources.
The law will regulate the use, sale, purchase, and transportation of petrochemical products, as well as oversee the operation of distribution stations and petrochemical facilities, the Saudi Press Agency report noted.
In addition to the Petroleum and Petrochemical Law, the Cabinet approved several other agreements on Jan. 7. These include a memorandum of understanding for cooperation between Saudi Arabia’s Ministry of Justice and Singapore’s Ministry of Law, an MoU on health cooperation with Morocco’s Ministry of Health and Social Protection, and an MoU to strengthen digital government collaboration between Saudi Arabia’s Digital Government Authority and Qatar’s Ministry of Communications and Information Technology.
The Cabinet also endorsed an air services agreement between Saudi Arabia and Eswatini, a Southern African nation.
Furthermore, the Cabinet reviewed ongoing development programs and projects aimed at diversifying the Kingdom’s economy, exploring new revenue streams, and maximizing the use of available resources.
EV maker Lucid becomes first global automotive manufacturing company to join ‘Made in Saudi’ program
EV maker Lucid becomes first global automotive manufacturing company to join ‘Made in Saudi’ program
- Aims to increase industrial sector’s contribution to GDP to at least 20% by 2025
- Move seeks to attract additional investments, enhance non-oil exports, and create sustainable job opportunities
RIYADH: Electric vehicle manufacturer Lucid Motors has become the first global automotive company to join the Kingdom’s “Made in Saudi” program as the country continues strengthening its industrial capabilities.
The milestone grants Lucid the right to use the “Saudi Made” label on its products, symbolizing the nation’s focus on quality and innovation.
The strategy aims to increase the industrial sector’s contribution to the gross domestic product to at least 20 percent by 2025, tripling the current industrial base.
It also seeks to attract additional investments, enhance non-oil exports, and create sustainable job opportunities, aligning with Vision 2030’s economic diversification goal.
“This is a step that represents a strong push to enhance the image of the national industry and attract investments and global companies, which consolidates the Kingdom’s position as a global center for innovative manufacturing,” Minister of Industry and Mineral Resources Bandar Alkhorayef said in a post on his X account.
In a separate statement, the minister said that Lucid Motors’ inclusion in the program underscores Saudi Arabia’s strategic transformation toward creating a fully integrated electric vehicle manufacturing ecosystem.
The minister added that this initiative aligns with the objectives of the National Industrial Strategy, which focuses on empowering promising sectors and attracting high-value investments in advanced industries.
Lucid’s participation in the program follows the launch of its first international manufacturing plant in Saudi Arabia in Sept. 2023.
Located in King Abdullah Economic City, the facility is the Kingdom’s first-ever car manufacturing plant and represents a key milestone in its efforts to build a domestic automotive industry.
The facility can currently assemble 5,000 Lucid vehicles annually during its first phase. Once fully operational, the complete manufacturing plant, including the assembly line, is expected to produce up to 155,000 electric cars per year.
Saudi Arabia is aggressively promoting the adoption of electric vehicles as part of its Vision 2030 strategy, which aims to achieve net-zero carbon emissions by 2060.
A critical target of the initiative is for 30 percent of all vehicles in Riyadh to be electric by 2030, contributing to a broader goal of reducing emissions in the capital by 50 percent.
To support the transition, the Public Investment Fund — a major backer of Lucid Motors — has been instrumental in establishing a domestic EV manufacturing sector.
In addition to its stake in Lucid Motors, PIF has launched Ceer, the Kingdom’s first locally branded electric vehicle manufacturer, as part of its efforts to bolster the industry.
Infrastructure development is also a core focus, with the Kingdom planning to deploy 5,000 fast chargers across Saudi Arabia by 2030 to facilitate the adoption of EVs.
Consumer interest in EVs is steadily growing, with over 40 percent of Saudi consumers considering purchasing an electric vehicle within the next three years, according to a 2024 report by London-based professional services network PwC.
Faisal Sultan, vice president and managing director for the Middle East at Lucid Motors, expressed the company’s pride in joining the program, saying: “We are delighted to join the ‘Made in Saudi’ program and have the honor of using the ‘Saudi Made’ label, which represents quality and excellence.”
He added: “We are committed to embodying the values of this national identity, such as sustainability, innovation, and excellence. With the increasing focus on electric vehicles in the Kingdom, we aim to deliver an advanced and unique experience to our customers.”
The minister said that Saudi Arabia has emerged as a central hub for electric vehicle production, supported by modern infrastructure, incentivizing policies, and a highly skilled workforce.
He also said that major players like Lucid Motors strengthen the Kingdom’s position as a global center for future-focused industries while contributing to increased local content, non-oil exports, industrial localization, and knowledge transfer.
Launched in March 2021, Saudi Arabia’s Made in Saudi program promotes domestic products and services, encouraging local consumption and boosting non-oil exports.
The move aligns with Saudi Arabia’s broader industrial strategy, which aims to increase the sector’s gross domestic product contribution to 20 percent by 2025 and drive investments in advanced industries.
It also supports Vision 2030’s goal of reducing the nation’s reliance on oil by fostering high-value sectors like electric vehicle manufacturing.
Closing Bell: Tadawul maintains upward momentum, closes at 12,113
- Parallel market Nomu dropped 54.97 points, ending the session at 30,809.12
- MSCI Tadawul Index rose by 3.48 points to reach 1,514.39
RIYADH: Saudi Arabia’s Tadawul All Share Index extended its upward trajectory for the second consecutive day on Tuesday, rising by 8.60 points, or 0.07 percent, to close at 12,113.29.
The benchmark index recorded a total trading turnover of SR7.71 billion ($2.05 billion), with 124 stocks advancing, while 110 saw declines.
In contrast, the Kingdom’s parallel market, Nomu, dropped 54.97 points, ending the session at 30,809.12. The MSCI Tadawul Index also gained ground, rising by 3.48 points to reach 1,514.39.
The standout performer of the day was Almoosa Health Co., which made its debut on the main market. The stock surged by an impressive 14.96 percent, closing at SR146. Other notable gainers included Al Mawarid Manpower Co. and Saudi Reinsurance Co., whose share prices climbed by 10 percent and 9.23 percent, closing at SR125.40 and SR63.90, respectively.
On the flip side, Al-Baha Investment and Development Co. saw its share price fall by 4.44 percent, ending the day at SR0.43.
On the announcements front, Filling and Packing Materials Manufacturing Co. announced it had signed a Shariah-compliant credit facility agreement worth SR50 million with Al Rajhi Bank to finance its working capital.
According to a statement on Tadawul, the 12-month credit facility is backed by a promissory note covering its entire value. FIPCO clarified that there are no related parties involved in the agreement. The company’s stock inched up by 0.44 percent, closing at SR45.70.
Meanwhile, LIVA Insurance Co. revealed it had received a Baa2 insurance financial strength rating with a stable outlook from Moody’s. The rating reflects the company’s strong capital adequacy, solid asset quality, and conservative investment strategy, alongside moderate reserve risk.
LIVA emphasized that the rating underscores Moody’s confidence in the company’s enhanced underwriting discipline and its ability to maintain profitability and growth within the Saudi market. A Baa2 rating is considered medium-grade, indicating a company’s acceptable ability to meet short-term debt obligations. LIVA’s stock gained 0.57 percent, closing at SR17.60.
