The Assets Air India Can Sell To Raise Rs 20,000 Crore
The first meeting of the inter-ministerial group on Air India is scheduled for Tuesday.
Air India could generate Rs 20,000 crore ($3.1 billion) if it decides to sell five of its assets, helping the state-run airline reduce its debt by more than a third, two senior government officials aware of the national carrier’s operations and finances told BloombergQuint.
The five assets are its short-haul international arm Air India Express, regional carrier Alliance Air, Hotel Corporation of India, Air India Engineering Services Ltd., and Air India Transport Services Ltd., the officials said. “Sale of Air India Express alone could generate over Rs 10,000 crore,” said one of the officials quoted above. Air India has a debt of Rs 52,000 crore on its books.
An inter-ministerial group set up to find ways to help the government divest its stake in the carrier is scheduled to meet on Tuesday. The two officials couldn’t say if such an asset sale is among the proposals to be considered by the group. BloombergQuint’s emailed queries to Air India remained unanswered.
India’s largest airline IndiGo has expressed interest to buy Air India, especially the carrier’s long-haul international operations. Its co-founder Rahul Bhatia had said it would not be interested in any joint venture with the government to run Air India.
Some foreign carriers also showed interest informally, Minister of State for Civil Aviation Jayant Sinha had said without revealing names.
The government started exploring divestment plans after its think tank NITI Aayog recommended a 100 percent stake sale in Air India, which is surviving on a Rs 30,000-crore bailout announced in 2012. The Cabinet then set up the inter-ministerial group to explore ways to either stem its losses or to invite private equity participation.
A full stake sale will be tricky, according to one of the officials quoted above. There were several hurdles, including a case against Air India’s order to purchase 111 aircraft registered by the Central Bureau of Investigation, the official said. The agency filed the case in May saying the Rs 70,000-crore order had prima facie favoured aircraft manufacturers.
Air India also holds land parcels across the globe, some of which, one of the officials quoted above said, were not even in their active memory and would be hard to trace.
Other plans to improve operations are also in the works. The airline is recruiting 400 new pilots and 800 in-fight crew, who would be inducted in tranches, one of the officials said.