RE: EOpriv: GREAT ESOP OPPORTUNITY IN INDIA ALA United Airlines

["Vic Thorpe" <just.solutions@pandora.be>]

Hi, Karen,

I actually was in touch with the Indian airline pilots' union about the
possibility of Air India's privatisation and their leading a bid for it
along the lines of United Airlines, about a year ago.  There was no interest
among them at that time.  Indeed, they seemed entirely apathetic about
change.

I have raised the question again via friends in the INTUC (one of the union
confederations) leadership, following Dan's copy of the article.  I am
awaiting a response at the moment.  But I'm not terribly hopeful.  It is
difficult to persuade people that they are not risking a lot by trying.

I'll get back to you if there is any useful reply.

Best wishes,

Vic Thorpe


-----Original Message-----
From: owner-eopriv@cog.kent.edu [mailto:owner-eopriv@cog.kent.edu]On
Behalf Of Karen May
Sent: 12 July 2001 22:02
To: EOpriv@cog.kent.edu
Subject: Re: EOpriv: GREAT ESOP OPPORTUNITY IN INDIA ALA United Airlines


I forwarded this article to an Indian friend of mine; for years we have
been debating the feasibility of a government role in stimulating
employee ownership and cooperatives, in the context of historically
corrupt relationships.  This was his response to the article:

"..it's so badly managed [India Air] that it would be an unpopular case
to work on. I would suggest starting with Praful Bidwai's articles in
Frontline magazine, available online and in all major libraries. The
magazine 'seminar' goes in depth into issues and often includes activist
voices and lists of organizations. It's a great magazine in general.
There are probably more than an issue or two on public disinvestment.
Both will provide you with a solid left perspective on the issue.  My
own instinctual perception on this is that the union is a highly
politicized one essentially given to protecting a workforce that is very
much like our government itself, corrupt, bloated and lazy."

I'm interested in additional perspectives on the union involved, if
anyone else on the list has contacts.

-Karen

Dan Bell wrote:
>
> Another step toward sale of Air India taken
>
> Thursday, July 05, 2001 NEW DELHI:
>
> The government said on Wednesday it wanted Indian nationals to dominate
the
> board of a privatized Air India as it moved a step closer to selling a
> controlling stake in the international carrier
> Disinvestment Minister Arun Shourie made the announcement to reporters as
he
> said the privatization panel had approved the shareholders' and share
> purchase agreement for offloading a 40 percent stake in the money-losing
> airline. The agreement spells out the extent of the winning bidder's
control
> over Air India.
>
> ``Two-thirds of the board should be made up of Indian nationals at all
times.
> The chairman and managing directors shall always be Indians,'' Shourie
said
> after the meeting of the panel headed by Prime Minister Atal Behari
Vajpayee.
>
> The announcement was seen as a clear sign that India wanted the airline to
> retain its distinctive Indian character.
>
> He also said the government would have the right to nominate three
directors
> and four independent directors would be appointed in consultation with the
> strategic partner but did not disclose how many members the board would
have.
>
> There are just two bidders for the airline whose sell-off is seen as a
litmus
> test of the government's commitment to privatization of large state-run
> companies.
>
> Singapore Airlines(SIAL.SI) has teamed up with the Tatas, one of India's
> largest industrial groups. The second bidder is Madras-based truck and
> bus-maker Ashok Leyland (ASOK.BO) controlled by the British-based Hinduja
> brothers.
>
> NEED BID CLEARANCE
> There has been widespread media speculation that the cabinet committee on
> security due to meet on Friday might not clear the Hindujas' bid because
of
> charges they face of receiving kickbacks from Sweden's Bofors in a $1.2
> billion artillery sale to the Indian army in 1986. The brothers deny any
> wrongdoing.
>
> The minister said last week India would proceed with the privatisation
even
> if only a single bidder is left in the fray as long as the reserve price
is
> met for the carrier which has lost money for the last seven years and has
a
> fleet of 25 aircraft.
>
> The government had said it wants to complete the privatisation of Air
India
> but Shourie last week declined to give a timeframe for completion of the
> sale.
>
> The minister said the Disinvestment Department would invite financial bids
> for Air India once outstanding issues were sorted out by the cabinet such
as
> sales tax exemption on aviation turbine fuel. ``It will be soon,'' he
said.
>
> Shourie also announced a stock option plan for airline employees under
which
> they would get 10 percent of the shares at face value of 10 rupees. This
> would work out to about 850 shares per employee. There would be a one-year
> lock-in period.
>
> Shourie said there would be no retrenchment in the first year and
afterwards
> there would be a voluntary separation package that should match the scheme
on
> offer at the time of disinvestment.
>
> Air India has around 17,800 employees and is viewed in the aviation
business
> as a bloated airline with one of the highest employees to aircraft ratio.
>
> The shareholders agreement stipulates that the strategic partners shall
not
> allow any ``prohibited person'' to acquire a controlling interest in the
> airline. Shourie defined a prohibited person as anyone prejudicial to
India's
> security and said this would be determined by the Home (Interior)
Ministry.
>
> Prior approval of the government would be required for the transfer of
shares
> by the strategic partner and no transfer should take place to a competitor
of
> Air India.
>
> --
> Dan Bell
> International Program Coordinator
> Ohio Employee Ownership Center
> Kent State University
> Kent, OH 44242
> (330) 672-0333 << New direct number!
> (330) 672-4063 fax
> dbell@kent.edu
> http://www.kent.edu/oeoc/
> http://cog.kent.edu