Modi government could well be on the path of privatising Air India, state backed national carrier, as the airline saw its budgetary support drying up in the interim budget of 2019-20. The government has allocated a meagre Rs 1,00,000 as extra budgetary support for the debt laden carrier which sits on accumulated loss of Rs 55,000 crore.
According to the budget document, Centre’s equity backing for the airline dropped by 99.99 percent to Rs 1 lakh against budgetary support of Rs 3,975 crore (revised estimate) during 2018-19.
The budget document further states that the amount for the “turnaround plan” of Air India will be transferred to the special purpose vehicle (SPV), Air India Asset Holding Company Ltd, to undertake the debt servicing programme.
As per the turnaround plan of the government, half of Air India’s debt of Rs 29,000 has been transferred to the SPV which has been tasked with selling the State carrier’s non-core, non-operational assets. The national carrier was reeling under a cumulative debt of Rs 55,000 crore until November 2018, when the government announced a revival plan for the carrier.
The SPV will be using the sale proceeds from the sale to pay off the debt that has been transferred in it. Apart from the current Rs 29,000 crore for FY19, the SPV will be given the entire budgetary support allocated under the interim budget to service the debt of Air India.
After the transfer of debt done in November, Air India is left with a debt of Rs 26,000 crore in its books of accounts. The airline also had an accumulated loss of Rs 30,000 crore till November 2018.
Air India’s first non-core asset to be sold will be its ground handling ARM, Air India Air Transport Service Ltd (AIATSL), which is the largest ground handling arm and has a market share of 80-85 percent. The subsidiary, being profitable, was considered the best option to start the process.
The government will soon be bringing out a preliminary information memorandum (PIM) for AIATSL to start the bidding process, which it envisions to complete by March 2019.
01/02/19 Nikita Vashisht/moneycontrol.com
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According to the budget document, Centre’s equity backing for the airline dropped by 99.99 percent to Rs 1 lakh against budgetary support of Rs 3,975 crore (revised estimate) during 2018-19.
The budget document further states that the amount for the “turnaround plan” of Air India will be transferred to the special purpose vehicle (SPV), Air India Asset Holding Company Ltd, to undertake the debt servicing programme.
As per the turnaround plan of the government, half of Air India’s debt of Rs 29,000 has been transferred to the SPV which has been tasked with selling the State carrier’s non-core, non-operational assets. The national carrier was reeling under a cumulative debt of Rs 55,000 crore until November 2018, when the government announced a revival plan for the carrier.
The SPV will be using the sale proceeds from the sale to pay off the debt that has been transferred in it. Apart from the current Rs 29,000 crore for FY19, the SPV will be given the entire budgetary support allocated under the interim budget to service the debt of Air India.
After the transfer of debt done in November, Air India is left with a debt of Rs 26,000 crore in its books of accounts. The airline also had an accumulated loss of Rs 30,000 crore till November 2018.
Air India’s first non-core asset to be sold will be its ground handling ARM, Air India Air Transport Service Ltd (AIATSL), which is the largest ground handling arm and has a market share of 80-85 percent. The subsidiary, being profitable, was considered the best option to start the process.
The government will soon be bringing out a preliminary information memorandum (PIM) for AIATSL to start the bidding process, which it envisions to complete by March 2019.
01/02/19 Nikita Vashisht/moneycontrol.com
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