Air India’s Non-Core Assets, Working Capital Loans To Be Transferred To Separate Entity
A group of ministers tasked with finding ways to explore state-run Air India’s divestment has decided to create a separate entity to pool in working capital loans and non-core assets of the national carrier.
The Air India Specific Alternative Mechanism decided to create a special purpose vehicle for warehousing accumulated working capital loans not backed by any assets along with its four subsidiaries, non-core assets, paintings and artefacts and other non-operational assets of the airline, Minister of State for Civil Aviation Jayant Sinha said in a response to a question in the Rajya Sabha during the ongoing winter session.
The government is yet to take any decision on writing off nearly Rs 50,000-crore debt of the airline, he said in a separate reply to a question in the Rajya Sabha.
Bloomberg had earlier reported, quoting people familiar with the matter, that the government proposes to transfer non-aviation assets and short-term loans up to Rs 30,000 crore to a separate company to ease the strategic sale.
The Cabinet Committee on Economic Affairs in June this year gave an in-principle nod for considering strategic divestment of Air India and its five subsidiaries. The Air India Specific Alternative Mechanism, led by Finance Minister Arun Jaitley, was to consider all options, including protecting employee interests and a voluntary retirement scheme.
In 2012, the government had approved the turnaround plan for the national carrier that involved equity support of Rs 30,231 crore over 10 years. The government has so far provided Rs 26,545 crore.
Air India had outstanding loans of Rs 48,877 crore as on March 31, comprising aircraft loans of Rs 17,360 crore and working capital loans of Rs 31,517 crore, according to disclosure in the parliament.
The airline plans to monetise its land and properties ahead of the divestment and targets to raise nearly Rs 670 crore. It involves the sale of lands and buildings through e-auction in 13 cities, including Delhi, Chennai, Trivandrum, Pune, Goa, Nashik, Gwalior and Lucknow, Kolkata and Bhuj, Bangaluru, Ahmedabad and Mumbai.
The state-owned airline saw its provisional operating profit rise to Rs 215 crore in the year ended March compared to Rs 105 crore in the previous year. The net loss narrowed marginally to Rs 3,643 crore during the period from Rs 3,837 crore.
For April to October, Air India had an average domestic market share of 13.18 percent and international market share of 16.38 percent, Sinha said.