Govt to consider AI debt write-off ahead of its sale
NEWDELHI: The aviation ministry and the Department of Investment and Public Asset Management will on Friday present to a ministerial panel their recommendation on the amount of debt that needs to be written off Air India’s books to make the airline attractive to potential investors, a government official said on condition of anonymity.
Dealing with Air India’s debt of just under ₹50,000 crore is a key step — the most critical one, according to some analysts — in the Centre’s plan to divest part or all of its stake in the airline.
Friday’s meeting is the second of the ministerial panel tasked to speed up this process. Apart from the Tata Group and IndiGo, private equity funds KKR and Co LP and Warburg Pincus LLC have expressed interest in acquiring Air India’s businesses, Mint reported on July 24.
The ministerial panel comprises finance minister Arun Jaitley, aviation minister Ashok Gajapathi Raju, transport minister Nitin Gadkari, railways minister Suresh Prabhu and power minister Piyush Goyal. The panel met first on 21 July. Gadkari did not attend that meeting as he was travelling.
At that meeting, Air India made a detailed presentation following which the ministers asked the aviation ministry and Department of Investment and Public Asset Management to prepare a note on the options to deal with the airline’s debt, Mint reported on July 25. “Friday’s meeting is expected to discuss these options,” the government official cited in the first instance said.
Air India had a debt of about ₹48,877 crore (at the end of March 2017) of which about ₹17,360 crore were aircraft loans and ₹31,517 crore were working capital loans.
The airline has a 17% share of traffic on routes linking India to international destinations and 13% of the domestic market. It also has valuable real estate, bilateral flying rights and soughtafter overseas airport slots.
IndiGo (InterGlobe Aviation Pvt. Ltd) has publicly expressed interest in Air India, while the Tata group, which started the airline in 1932 before it was nationalized, has also sought details from the government in informal conversations, Mint reported on July 20. KKR and Warbug Pincus are also believed to be keen on the national carrier.
The airline reported a loss of about ₹3,587 crore in 2015-16, compared with a loss of ₹5,859 crore the previous year.