The central government is considering reducing Air India's debt further and delaying its disinvestment process in order to woo buyers, senior officials said on Friday.
The clarification from the state carrier came after information about the suspension of all flights to and from Dubai was made public by the officials of the Dubai Civil Aviation Authority earlier in the day.
The central government is considering reducing Air India’s debt further and delaying its disinvestment process in order to woo buyers, senior officials said on Friday. The debt of Air India as on March 31, 2019 was Rs 58, 255 crore. Later in 2019, Rs 29,464 crore of this debt was transferred from Air India to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL).
“The government is considering reducing the debt of the airline further in order to make it attractive for interested parties in the current economic scenario affected by the COVID-19 pandemic,” a senior government official said. More time is likely to be given to bidders to submit their bids and it will delay the disinvestment process further, another government official said. The deadline to submit bids for the national carrier has already been extended four times this year.
The fourth extension was given on August 25 when the deadline for placing bids for Air India was pushed by two months to October 30 as the COVID-19 fallout has disrupted economic activity globally. The process of stake sale in the national carrier was initiated on January 27.
“Air India Limited has been suffering continuous losses. The COVID-19 pandemic along with its related impact on the aviation industry has further worsened the financial position of the company,” Civil Aviation Minister Hardeep Singh Puri had said on Thursday. Air India has incurred a net loss of about Rs 2,570 crore in the first quarter of 2020-21 as compared to a net loss of Rs 785 crore sustained in the corresponding period a year ago, he added in a written reply to a question in Lok Sabha.
An amount of Rs 1,000 crore as loan to Air India has also been provided in the current financial year, Puri stated. After its unsuccessful bid to sell Air India in 2018, the government in January this year restarted the divestment process and invited bids for selling 100 per cent of its equity in the state-owned airline, including Air India’s 100 per cent shareholding in Air India Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.
In 2018, the government had offered to sell its 76 per cent stake in the airline. The aviation sector has been significantly impacted due to the travel restrictions imposed in India and other countries in view of the coronavirus pandemic. All airlines in India have taken cost-cutting measures such as pay cuts, leave without pay or firings of employees in order to conserve cash.