Sunday, February 04, 2018

As Strategic disinvestment in Air India, Government to bundle Rs 48,000 Crore debt

Air India had loans amounting to Rs. 17,360 Crore on 31st March 2017. In this strategic disinvestment process, the two profit-making subsidiaries of Air India namely Air India Express and AI-SATS the ground-handling firm will be provided in the package as well along with the national carrier. Jayant Sinha, the minister of state for civil aviation told the reporters on Friday that the winning bidder for Air India is expected to come out by June end and by the end of the year, the legal closing of the transaction too will take place. The consultancy firm EY has been appointed as the transaction advisor of the strategic sale of Air India by the government. The government has also stated that the foreign direct investment can allow the entities situated overseas to acquire up to 49% stake in the airline owned by the state. The government is supporting the airline under the turnaround plan which had been approved by the center in the year 2012. Air India will also be receiving up to Rs. 30,231 Crore from the government in order to meet certain set performance parameters over the period of ten years starting from the year 2012.

Air India suffered a net loss of Rs. 3,643 Crore during the year 2016-17 as per the provisional data which was presented in the Parliament by the civil aviation ministry. The finance ministry allocated Rs. 650 Crore to Air India in the union budget for 2018-19 which was presented on Thursday. Rs. 650 Crore was offered under the turnaround plan wherein less than half of Rs. 1,800 Crore were earmarked for 2017-18. More than Rs. 26,000 has been provided to the airline under this package. Additionally, an amount of Rs. 560 Crore will be infused in the airline during the forthcoming financial year and extra-budgetary resources.
03/02/18 Saumya/The Indian Wire