The government is likely to pay Air India’s dues worth Rs 22,000 crore to vendors such as
airports and oil companies before putting up the airline for sale, senior government
officials told ET.
The government may also waive the airline’s entire working capital debt of about Rs 15,500 crore, enabling it to offer Air India to potential buyers with its loan burden reduced to about Rs 20,000 crore.
“We are discussing ways to reduce these dues, which the airline owes to oil companies and various airport operators, among others,” said a senior government official who did not want to be identified. The official said prospects for a better offer for the national carrier would improve if its debt is restructured and brought to the level of Air India’s revenue, which was about Rs 30,000 crore during 2018-19. “We expect about Rs 15,000 crore to come from the sale of properties. Also, a better balance sheet would fetch a premium for the airline. A better balance sheet would easily fetch more than the annual revenue of Air India,” said the official.
The official, however, said the floor price for Air India has not been finalised. The debt proposals are being discussed by a committee of secretaries headed by the cabinet secretary and will need to be approved by a panel headed by home minister Amit Shah, which is likely to meet this month.
Another official said documents for Air India’s sale may be delayed further and not come out by the end of this month. The government is trying to reduce Air India’s debt to make it lucrative for probable buyers, after investors didn’t bid for a 76% stake in the airline last year.
12/11/19 Mihir Mishra/Economic Times
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The government may also waive the airline’s entire working capital debt of about Rs 15,500 crore, enabling it to offer Air India to potential buyers with its loan burden reduced to about Rs 20,000 crore.
“We are discussing ways to reduce these dues, which the airline owes to oil companies and various airport operators, among others,” said a senior government official who did not want to be identified. The official said prospects for a better offer for the national carrier would improve if its debt is restructured and brought to the level of Air India’s revenue, which was about Rs 30,000 crore during 2018-19. “We expect about Rs 15,000 crore to come from the sale of properties. Also, a better balance sheet would fetch a premium for the airline. A better balance sheet would easily fetch more than the annual revenue of Air India,” said the official.
The official, however, said the floor price for Air India has not been finalised. The debt proposals are being discussed by a committee of secretaries headed by the cabinet secretary and will need to be approved by a panel headed by home minister Amit Shah, which is likely to meet this month.
Another official said documents for Air India’s sale may be delayed further and not come out by the end of this month. The government is trying to reduce Air India’s debt to make it lucrative for probable buyers, after investors didn’t bid for a 76% stake in the airline last year.
12/11/19 Mihir Mishra/Economic Times
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