Air India’s debt could be 40% higher than estimated, says Ashok Gajapathi Raju

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New Delhi: Air India’s debt could turn out to be 40% higher than previously expected as the airline’s books are combed even as the government has received the first foreign interest in the airline, civil aviation minister Ashok Gajapathi Raju said.

“When our exercise of calculating Air India’s debt began, we found that the sum was hovering around the Rs50,000 crore mark. But I won’t be surprised if the total debt reaches Rs70,000 crore. Since people are looking at the books carefully, they may find more,” the minister told Network 18 in an interview published on Sunday.

Air India had been estimated to have a total debt of about Rs48,877 crore at the end of March 2017, of which Rs17,360 crore is aircraft loans and Rs31,517 crore is working capital loans.

“According to me, Air India is a debt trap. I said as much in Parliament as well. As far as our account books are concerned, we held an internal meeting where we saw that this accounting year is sorted for us as a part of our own dividends that we get will be used up. The next accounting year needs to be looked into,” he added.

“Another foreign operator has also shown interest in buying 49% stake. So there is certainly a lot of interest” in Air India, the minister said, without disclosing the name.

Civil aviation secretary R.N. Choubey told Mint that a foreign firm has sent “unsolicited” letter of interest for Air India. Foreign firms can own 100% of an Indian airline but foreign airline firms can own only 49% of an Indian airline.

This month, the government had also eased rules allowing foreign airlines to buy a stake of up to 49% in Air India with prior government approval but with the caveat that substantial ownership and effective control of Air India will remain with Indian nationals as is the case with all domestic airlines.

IndiGo, run by InterGlobe Aviation Ltd, and Tata group have shown interest in Air India’s operations.

Turkey’s Celebi Aviation Holding, Bird Group, Menzies Aviation Plc and Livewel Aviation Services Pvt. Ltd have also shown interest in the national carrier’s subsidiaries.

Air India has a fleet of about 140 planes, with a 17% share of traffic on routes linking India to international destinations and about 13% share of the domestic market.

The national carrier, which is part of the world’s biggest airline grouping Star Alliance, also has prime slots at airports across the world along with land banks and buildings, among its assets.

The government hopes to invite expressions of interest from companies after Union Budget 2018, Mint reported on 9 January.

Consulting firm CAPA Centre for Aviation said this month that it expects “significant interest from foreign airlines” as also “4-6 serious bids for AI, subject to bid conditions”.livemint