Air India privatisation: New owner may not get Rs21,000 crore of promised equity

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New Delhi: The government may not infuse about Rs21,000 crore in the promised equity into Air India Ltd once the state-owned airline is privatised, a top official said.

Air India was promised Rs50,000 crore in equity infusion until 2032 by the previous United Progressive Alliance government in 2012 to bail out the airline weighed down by accumulated losses and debt.

Of the Rs50,000 crore, Air India has already received nearly Rs27,000 crore, including Rs1,800 crore this fiscal year. An amount of Rs1,800 crore is earmarked for infusion in the carrier in the next fiscal, the year in which the airline is likely to be privatised in line with the current road-map of the government, said a government official who did not wish to be named. The numbers can change depending on the sale process, the official added.

This will mean the new owner of the airline will not get the promised Rs21,000 crore of equity.

“I don’t think government of India will inject equity in a privatised airline,” civil aviation secretary R.N. Choubey said on the sidelines of a press conference on Tuesday.

Air India had total debt of about Rs48,877 crore at the end of March 2017, of which about Rs17,360 crore were aircraft loans and Rs31,517 crore were working capital loans.

The airline has vast assets including intangibles like airport slots and international flying rights, among other things. It also has valuable real estate globally. The airline has about 17% share of traffic on routes linking India to international destinations and 13% of the domestic market.

Choubey, who is part of the meetings led by finance minister Arun Jaitley looking into Air India’s privatisation, said data on the airline’s real estate assets are being collated and the sale process will continue parallelly. Typically, a disinvestment process takes nine months to a year.

“Our intention is to do it very, very fast. On that, we are committed. We are serious and we want to do it fast,” Chaubey said, adding that a decision on retaining the brand name of the airline will be taken by the Jaitley-led ministerial group.

Among those waiting for the details of the sale is the Tata group, which started the airline in 1932 before it was nationalized.

InterGlobe Aviation Ltd, which runs IndiGo, Bird Group, and Turkey’s Celebi are among companies that have shown interest in buying some parts of Air India.

So far, the government has sought expressions of interest for transaction advisers and law firms. That selection process is almost complete, but the names of the law firm and the transaction advisor are yet to be formally announced by the Department of Investment and Public Asset Management (Dipam).

“The selection is almost complete and we should get these names soon,” the first government official cited above said.

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