One of the primary concerns associated with the strategic disinvestment of flag-carrier Air India Ltd – the state-owned carrier's Rs 48,000-crore debt – may be taken off the taxpayer's plate as the Centre plans to bundle the liability as part of the sale of the airline, a senior government official told The Indian Express. As of March 31, 2017, Air India had aircraft loans of Rs 17,360 crore, along with working capital loans of Rs 31,517 crore. However, along with Air India, two of its subsidiaries – low-cost carrier Air India Express and ground-handling firm AI-SATS – which are profit-making entities, will be offered in a package along with the national carrier. “If there is so much debt.naturally, if I am selling a machine, the debt of the machine will also go with it. How can the debt be kept away? Strategic sale should not be seen as a method of realisation of money. The concept is that the true economic wealth of the company is not being exploited. The potential, the rights, all the brownfield project can be expanded with very little effort,” said the official, who is a part of the airline's disinvestment process. On Friday, Minister of State for Civil Aviation Jayant Sinha told reporters that the government expects to have the winning bidder for Air India by the end of June and the “legal closing” of the transaction would be done by year-end. The government has appointed consultancy firm EY as the transaction advisor for Air India's strategic sale. The minister also said that Air India would be offered to potential buyers as four different entities – Air India, its low-cost arm Air India Express and subsidiary AI-SATS would be one entity, while regional airline Alliance Air would be a separate entity. Apart from these, Air India Air Transport Services Ltd (AIATSL) and Air India Engineering Services Ltd (AIESL) would be sold separately, he added. The Union Cabinet, in June last year, granted an in-principle approval for the strategic sale of Air India and its subsidiaries and this process is being monitored by Air India-Specific Alternative Mechanism headed by finance minister Arun Jaitley. One of the stated objectives of this group of ministers and officials was “treatment of unsustainable debt of Air India”. Last month, in response to a question in Lok Sabha, Minister of State for Finance Pon. Radhakrishnan said that the group has decided creating a special purpose vehicle for warehousing accumulated working capital loan “not backed by any asset along with its four subsidiaries” apart from other non-core assets. Furthermore, the government also tweaked the foreign direct investment rules to allow overseas entities to acquire up to 49 per cent stake in the state-owned airline. The airline is being supported by the government under a turnaround plan approved by the Centre in 2012. As part the plan, Air India is set to receive up to Rs 30,231 crore from the government subject to meeting certain performance parameters over a ten-year period starting 2012. According to provisional data provided in Parliament by the civil aviation ministry, Air India incurred a net loss of Rs 3,643 crore during 2016-17. In the Union Budget for 2018-19 presented on Thursday, the finance ministry allocated a sum of Rs 650 crore to Air India under the turnaround plan, less than half of Rs 1,800 crore earmarked for 2017-18. The airline has already received more than Rs 26,000 crore under the package. Further, an amount of Rs 506 crore will be injected in the airline during the upcoming financial year Internal and Extra Budgetary Resources.
