Friday, June 09, 2017

Government must resist distress sale of Air India: Sources

Mumbai: Air India's tangible and intangible assets can well match its over Rs 52,000 crore debt burden and the government should resist a distress sale of the carrier, according to sources at the airline.

As calls for divestment, including privatisation, of the loss-making Air India get louder, the civil aviation ministry is looking at all options for the airline's revival.

The state-owned air carrier is estimated to have debt of over Rs 52,000 crore. Finance Minister Arun Jaitley said last week that the ministry has to explore all possibilities "as to how the privatisation of Air India can be done". The comments came against the backdrop of NITI Aayog submitting its suggestions on the future course for the airline. Airline sources said when the government is talking about Air India's debt, it should also consider the assets’ side. "No other airline in the country has so much of assets on its balance sheet as much as Air India. In fact, there are corresponding assets against the total debt of Rs 52,000 crore," the sources said. On the basis of a valuation carried out in 2007, the airline's gross value, including aircraft and other assets, was pegged at Rs 40,000 crore.

Air India's plans to expand its fleet have hit an air pocket, amid uncertainty after NITI Aayog proposed privatisation to the Prime Minister's Office. Decisions approved earlier by the airline's board regarding aircraft acquisitions are currently "on hold" and tenders for procurement of new planes have been deferred till clarity emerges, an airline source said.
09/06/17 PTI/Business Standard