Mumbai: The government is working on the debt issue of national carrier Air India to make it more attractive to buyers, a top official said on Monday.
Civil Aviation secretary Pradeep Singh Kharola indicated that the government's decision to retain partial stake in the national carrier coupled with huge debt prevented potential investors to bid for the debt-ridden airline.
"We made an attempt last year. We learnt a few lessons and we are trying to work on that and improve at this point in time. The major lesson was that time we said that only 76 per cent of Air India will be disinvested and rest 24 per cent will be retained by the government.
"However the feedback we got was people were not much interested and they wanted 100 per cent disinvestment so this time its is 100 per cent," Kharola said at the India Economic Conclave 2019 here.
The second and the most important learning of the bid process was regarding Air India's accumulated huge amount of debt, which was retained by saleable part of the airline and was parked in the special purpose vehicle.
"However, investors thought that the amount of debt retained by the carrier was not going to sustain so we are working on that also. We will see to it that the debt being parked with Air India is such that any bidder will be able to make it sustainable and if he feels that he can invest and improve profitably," Kharola added.
He also said the government has been discussing the issue of substantial ownership and effective control, saying each country says that if you want to operate from the same country, then substantial ownership will lie with the national (partner).
Kharola further said that the 20 per cent decline in capacity due to the grounding of Jet Airways in April this year has been compensated fully after the induction of aircraft by operators and it is now more than that before the airline stopped operations.
16/12/19 PTI/Business Standard
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Civil Aviation secretary Pradeep Singh Kharola indicated that the government's decision to retain partial stake in the national carrier coupled with huge debt prevented potential investors to bid for the debt-ridden airline.
"We made an attempt last year. We learnt a few lessons and we are trying to work on that and improve at this point in time. The major lesson was that time we said that only 76 per cent of Air India will be disinvested and rest 24 per cent will be retained by the government.
"However the feedback we got was people were not much interested and they wanted 100 per cent disinvestment so this time its is 100 per cent," Kharola said at the India Economic Conclave 2019 here.
The second and the most important learning of the bid process was regarding Air India's accumulated huge amount of debt, which was retained by saleable part of the airline and was parked in the special purpose vehicle.
"However, investors thought that the amount of debt retained by the carrier was not going to sustain so we are working on that also. We will see to it that the debt being parked with Air India is such that any bidder will be able to make it sustainable and if he feels that he can invest and improve profitably," Kharola added.
He also said the government has been discussing the issue of substantial ownership and effective control, saying each country says that if you want to operate from the same country, then substantial ownership will lie with the national (partner).
Kharola further said that the 20 per cent decline in capacity due to the grounding of Jet Airways in April this year has been compensated fully after the induction of aircraft by operators and it is now more than that before the airline stopped operations.
16/12/19 PTI/Business Standard
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