Thursday, September 27, 2018

Air India is back to drain the Indian taxpayers’ wallets

The failure to sell Air India could further drain taxpayers’ money as the government tries to keep it airborne.

On Wednesday (Sep. 26), union minister of state for civil aviation Jayant Sinha said discussions for a bailout package were in an advanced stage. “We are going through the government approval process,” Sinha said without outlining the contours of the deal nor specifying the quantum of money the government plans to infuse.

Only in July this year, the government had sought parliament’s approval to pump in Rs980 crore ($135 million) into Air India. At the time, a distress signal was sent to the finance ministry, saying the firm required Rs500 crore urgently, failing which it would default on its loan payments.
The Maharajah’s divestment plans were torpedoed in June by its huge loan book that made it unattractive to potential suitors.

The company has a total debt of around Rs52,000 crore, of which Rs22,000 crore are loans pertaining to buying of aircraft and the rest comprises working capital loans and other liabilities.

The debt notwithstanding, Air India is an asset-rich airline like no other. After divestment plans failed, the government had then said it would sell non-core assets like land and buildings.
27/09/18 Kamalika Ghosh/Quartz