1. Air India privatisation: Government may write off dues up to Rs 30,000 crore

Air India privatisation: Government may write off dues up to Rs 30,000 crore

A Cabinet note formulated in this regard is set to be discussed by the council of ministers headed by Prime Minister Narendra Modi soon, the sources said.

By: | New Delhi | Published: June 16, 2017 6:54 AM
Air India privatisation, Government of India, PM Narendra Modi, FDI, cabinet note, Indian airlines The government has firmed up a plan to exit the loss-making national carrier Air India, involving the write-off of roughly half of its estimated liabilities of Rs 60,000 crore. (PTI)

The government has firmed up a plan to exit the loss-making national carrier Air India, involving the write-off of roughly half of its estimated liabilities of Rs 60,000 crore, with a possible haircut by banks reducing the cost of the exercise to the exchequer. While the write-off is of the carrier’s liabilities not backed by assets, the government might also have to incur an expenditure for the settlement of the sovereign-backed part of AI’s aircraft loan of about Rs 21,000 crore, sources privy to the matter told FE. A third of the carrier’s aircraft loan is guaranteed by the government. A Cabinet note formulated in this regard is set to be discussed by the council of ministers headed by Prime Minister Narendra Modi soon, the sources said. However, they added that lenders to the carrier have in informal talks with the government expressed their willingness to negotiate with the government on how to settle the AI loans including re-setting interest rates to accommodate the government’s plan.

The sources added that the civil aviation ministry has also internally made a rough estimate of the value of AI’s physical assets including its 115-strong aircraft fleet (including Boeing Dreamliners), land parcels, buildings and also its valuable flying/landing rights and parking slots at airports across the world. “These assets are worth around Rs 25,000-30,000 crore,” a source said, adding that the government could quit AI by end-March 2018 and transfer it to a new private-sector owner.

Besides issues related to debt, the government would also have to take a call whether it would like to retain a minority stake in AI or not, another official said. It is understood that the Cabinet note doesn’t bar foreign airlines from participating in the acquisition of AI. Current FDI rules allow foreign airlines to buy up to 49% stake in Indian airlines.After the Cabinet gives its in-principle approval to the proposals by June-end, the government would appoint transaction advisers and asset valuers to take forward the divestment process.

While efforts have been made to revive the airline, AI has not reported a profit in at least a decade; in 2015-16 it posted an operating profit of Rs 105 crore and reduced its net loss to Rs 3,837 crore compared with Rs 5,859 crore in 2014-15.Retaining the airline in its fold is a much more expensive proposition for the government than transferring the ownership. The government will require to infuse amounts much higher than the Rs 50,000 crore proposed under a revival plan for AI if it decides to hang in there. The Centre has already infused Rs 28,000 crore in the airline over the past few years. The airline is incurring a cash loss of Rs 200 crore every month.

  1. M
    Madhu
    Jun 20, 2017 at 2:20 pm
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      DevashishMaankibaat
      Jun 17, 2017 at 8:59 am
      Air India is a gold mine. Having sufficient fleet, maintenance facilities, expertise and properties world wide. All flights of Air India are booked all sectors having full load then why to privatise!! Loans are not such if waived national economy will collapse. Why we tend to sell an Ikon a treasure of its kind!!
      Reply
      1. B
        Bhavya
        Jun 16, 2017 at 10:22 pm
        Only this government is bold enough to stop pumping more money into a crippled airline. They have the best brains and will do the best in National interest.
        Reply
        1. S
          Sanat Limaye
          Jun 16, 2017 at 4:22 pm
          If dues are at all to be written off then there is no need to privatize the airlines because then the crux of the problem of servicing huge debt would be gone and the present management under the able leadership of Shri Lohani would steer away AI to profitability.This way the government would have a presence in this important sector . Otherwise the fares will go haywire and the whole idea behind government's UDAN would collapse.
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          1. I
            Indian
            Jun 16, 2017 at 12:08 pm
            The.Govt. should take into consideration the fate of the employees of AI at it is obvious that the buyer who will buy it,will not run the airline, rather he will gain a profit by selling each and every property of AI . What happened to Jessop Co. Ashoka Air Port Hotel, Calcutta, thanks to then , Disinvestment Minister Mr. Arun Shourie of last NDA Govt. Now both the organisations are closed. People ( Politicians as well Ministers )who are responsible for making Maharaja a BEGGAR ,are moving freely. Why Modi Govt. is not serious about prosecuting them as earliest as possible who always talk of zero tolerance on CORRUPTION. Where as it is in a hurry to sell AI. Is it a move towards- MAKE IN INDIA or ACHCHE DIN ?
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              bond
              Jun 16, 2017 at 9:46 am
              No Government, neither UPA nor NDA is really interested in reviving Air India. This airline is a milch cow for politicians from all parties. Getting Free tickets, Free Upgrades, putting flights on fancied unprofitable routes for the sake of cons uencies, using AI for travel of Parliamentary committees to fancy resorts / hill stations is a long and well entrenched scam. No one looks at the interference that the Govt. or ministries has in Air India. Politicians use Media to spread lies of public money being squandered, to close Air India or privatize it. Why does the media not question the 7 Lakh crore of NPA that private companies owe to the banks. Is that not PUBLIC MONEY....Just think seriously who is behind this scam to privatize Air India....A nexus of UPA and NDA politicians
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                Indian
                Jun 16, 2017 at 12:47 pm
                Recently nda govt celebrated its third anniversary. Even after three years of coming to power, it is silent on air India scam involving several thousand crores. Every body knows which politician and govt. Made the maharaja a beggar but no action taken thanks to modi Ji zero tolerance corruption policy.
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