Friday, November 15, 2019

Gov't to defer Air India sale to 1Q20 to clear its debts

The Indian government will defer the launch of the privatisation process of Air India (AI, Mumbai Int'l) to first further reduce the carrier's level of debt and plans to launch the sale in the first quarter of 2020, the Indian media have reported.

According to the Economic Times, in order to make the company more attractive, the government is planning to directly repay INR220 billion rupees (USD3.1 billion) owed by Air India to fuel suppliers, ground handlers, and airports. The government is also considering waiving the INR155 billion (USD2.2 billion) debt owed directly to the state by the airline.

"We are discussing ways to reduce these dues, which the airline owes to oil companies and various airport operators, among others," an unnamed government official said.

The airline's total debt stood at around INR600 billion (USD8.4 billion) before the government assumed INR294 billion (USD4.1 billion) through a special purpose vehicle Air India Asset Holding Ltd (AIAHL) earlier this year. AIAHL is now issuing bonds in tranches to repay this debt. On top of the remaining INR306 billion (USD4.3 billion) debt, Air India also has around INR220 billion (USD3.1 billion) in other liabilities.

Taking into account all planned moves, the total debt of Air India, including towards customers who purchased tickets, would be reduced to below INR200 billion (USD2.8 billion).

The government's stated goal is to reduce Air India's total debt to below the level of its annual revenues, which stood at nearly INR300 billion (USD3.1 billion) last year.

The carrier has also embarked on a real estate selling drive, hoping to earn around INR150 billion (USD2.1 billion) from the sale of properties in India and abroad. The proceeds would go towards the repayment of legacy debt.
14/11/19 ch-aviation
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