The Centre is examining all options, including disinvestment and privatisation of Air India, in order to turnaround the state-owned airline burdened by a mountain of debt, top aviation ministry officials said. A decision on the future course of actions for Air India is expected to be taken within three months. The ministry is working on a number of suggestions given by Niti Aayog on revival of Air India which include stake sale to a strategic investor. Air India’s consolidated debt has risen to around Rs 50,000 crore, even as the merger between the Air India and Indian Airlines approved in 2007 did not lead to the desired benefits that were expected to accrue from the merger — a matter now being probed by the Central Bureau of Investigation (CBI).
Niti Aayog, the government’s think tank, has recommended strategic disinvestment of loss-making Air India so that the Centre does not have to sink in more money into the airline and can allocate more funds for health and education.
The report completes the groundwork for the Centre to initiate the sale of the airline and comes in the wake of finance minister Arun Jaitley’s support for stake sale in the bleeding carrier.
Niti Aayog’s fourth report, which was submitted recently, has detailed a possible roadmap for Air India disinvestment, which includes writing off loans to the tune of Rs 30,000 crore. AI has debt of around Rs 60,000 crore, which includes around Rs 21,000 crore of aircraft-related loans and around Rs 8,000 crore working capital, said aviation sources.
The proposal is to transfer the aircraft-related loans and the working capital to the new owner, while taking care of half the liability.
Similarly, Niti Aayog has suggested that the real estate assets, which includes prime properties in Mumbai’s Nariman Point and some places in Delhi like Vasant Vihar, be hived off into a separate company before offering up to 100% equity to a strategic partner.