Government plans to raise Rs 10,000 crore from sale of Air India units & assets
Government plans to gear up to sell ground handling, engineering and regional airline subsidiary Alliance Air.
“The government is estimating an amount of Rs 10,000 crore from the sale and divestments. The money is to be used to reduce the debt from the current Rs 29,000 crore,” said a senior government official, who did not want to be identified.
The government hopes to raise the money through sale of profit-making ground handling, engineering and regional airline subsidiary Alliance Air. Sale of assets like AI building in Mumbai and others are also likely to fetch Rs 1,400 crore for Air India.
As part of the plan to restructure Air India’s finances after the plan to sell 76% in the airline found no buyer last year, the government decided to ease the debt burden of the national carrier by transferring Rs 29,000 crore working capital debt from a total of Rs 54,000 crore into a special purpose vehicle – Air India Asset Holdings Ltd.
With this transfer, the government took over about Rs 2,700 crore of the airline’s annual interest payment liability out of Rs 4,400 crore that it had to pay every year.
Meanwhile, the government has asked Air India to update its financial numbers and compile them in time to kickstart the process of Air India divestment after the new government takes charge.
The divestment process, however, may be scrapped if the current ruling coalition is not able to get majority in the Lok Sabha.
Aviation secretary Pradeep Singh Kharola held a meeting early this month and has written to Air India CMD Ashwani Lohani to prepare these subsidiaries for divestment.
“I would like to request you to kindly get financials of Air India and its subsidiaries for the fiscal 2018-19 finalised by the end of June 2019,” read the letter dated May 6, 2019. ET has seen a copy of the letter.
The letter also wants the airline to prepare a physical verification of the inventories, a list of all litigations be drawn up and account of receivables and payables.
While the government plans to start the divestment process, the airline told the government that repayment of about Rs 9,000 crore of principal amount on loans is coming up in the current financial year and it would need government’s support.