Tuesday, December 12, 2017

Air India privatisation: National carrier to be split in 2 before sale

New Delhi: To fast-track the privatisation of state-run Air India (AI), the government is likely to first divide the enterprise into two: AI and Air India Express (AIE), which undertakes the airline’s profitable West Asia operations, would be combined and put up for sale; another special purpose vehicle (SPV) that will include AI’s Rs 32,000-crore working capital debt, its other subsidiaries including Alliance Air and assets such as land and buildings, will be monetised later.
According to official sources, while a Cabinet note detailing this plan has been prepared on the lines of the recommendations of a ministerial group headed by finance minister Arun Jaitley, the idea is to conclude the sale of AI-AIE by the end of the fiscal and the undertake the balance transactions in due course.
The sources added that along with AI’s 12,000-strong workforce, its headquarters building at Delhi’s Gurudwara Rakabganj Road and 115 aircraft, the prospective buyer of AI-AIE will also have to take over the airline’s Rs 20,000-crore aircraft-related loans and AI’s Rs 8,000-crore dues to oil retailers.
Though valuations are yet to be done, officials reckon that government’s receipts from the sale this year could be close to Rs 15,000 crore.
Separately, the proposed SPV will negotiate for settling AI’s Rs 32,000-crore debt which could see banks taking a haircut. During informal talks with the government, lenders to the carrier have understood to have expressed their willingness to negotiate with it on how to settle the AI loans.
12/12/17 Prasanta Sahu/Financial Express

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