Wednesday, July 10, 2019

Not Just Air India, Govt is Unable to Sell its Attractive and Profitable Ground Handling Arm Too

New Delhi: The government is preparing to initiate strategic disinvestment of Air India (AI) once again, after an earlier attempt at a sale had bombed. At that time, not a single bid was received for the airline.

The biggest roadblocks to AI sale include the remaining debt on its books, even after roughly half the debt has been transferred to a Special Purpose Vehicle (SPV). Its accumulated losses exceeding Rs 50,000 crore and nervousness among potential investors about the government wanting to again hold on to a minority stake in the airline are other irritants. But after the first attempt at AI sale had bombed, the government had gone ahead and initiated the sale of AI’s profit-making, ground handling subsidiary in February this year. A preliminary information memorandum (PIM) for the sale of Air India Air Transport Management Ltd (AIATSL) had been issued then.
However, the process for AIATSL remains stuck. An official close to developments said potential investors asked a number of queries as part of the sale process and these were yet to be answered. The PIM has seen five corrigenda, the last one being issued last month. This one pushes the date of completion of the process to the end of August versus April initially.

The official quoted above said concerns over the status of AIATSL remained even as the government had not moved to initiate a similar sale of AISATS, the separate ground-handling joint venture of AI with SATS of Singapore.
“First of all, why did the government want to offload a profit-making arm of Air India, when the airline itself remains unsold? This question begs an answer. Second, what will be the status of AIATSL? It is currently a subsidiary of AI. Will it remain a subsidiary after its own disinvestment? What will be its status if the airline (AI) is divested first? These fundamental questions remain,” the official said.

10/07/19 Sindhu Bhattacharya/News18

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