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Tuesday, 14 May, 2019, 13 : 30 PM [IST]

Government plans to raise INR 10,000 crore via sale of Air India assets

According to a report by Mihir Mishra, in The Economic Times, the government plans to raise up to INR10,000 crore by selling the subsidiaries of Air India and other assets to repay a part of the national carrier’s debt of INR 29,000 crore that the government has taken over from the national carrier. “The government is estimating an amount of INR 10,000 crore from the sale and divestments. The money is to be used to reduce the debt from the current INR 29,000 crore,” said a senior government official. The government hopes to raise the money through the sale of the ground handling, engineering and regional airline subsidiary Alliance Air. Sale of assets like the Air India building in Mumbai and others are also likely to fetch INR 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 carrier by transferring INR 29,000 crore working capital debt from a total of INR 54,000 crore into a special purpose vehicle – Air India Asset Holdings. With this transfer, the government took over about INR 2,700 crore of the airline’s annual interest payment liability out of INR 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. Pradeep Singh Kharola, Aviation Secretary , held a meeting early this month and has written to Ashwani Lohani, CMD, Air India, 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. 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 the repayment of about INR 9,000 crore of principal amount on aircraft loans is coming up in the current financial year and that the national carrier would need the support of the government in the repayment.
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