The government on Tuesday gave its nod for divesting its 100 per cent stake in Air India’s profitable ground handling arm — Air India Air Transport Services (AIATSL).
Civil Aviation Secretary RN Choubey said an inter-ministerial panel headed by Finance Minister Arun Jaitley has approved the bid document. The decision is a part of the government’s attempt to revive the loss-making carrier, which includes transferring the carrier’s working capital debt of around Rs 30,000 crore and non-core assets to a special purpose vehicle (SPV).
“The expression of interest will be floated after transferring AIATSL into an SPV. SBI Capital Markets has been authorised to carry out this transaction. The proceeds from the sale of AIATSL will be used to pay off Air India’s debt,” Choubey told reporters. The government had received unsolicited offers for taking over Air India’s ground handling services. AIATSL had a turnover of Rs 575 crore in FY17, and made profits of Rs 69 crore. It had a networth of around Rs 300 crore.
Air India had a total debt of Rs 48,447 crore at the end of March 2017. In June this year, the government called off the proposed sale of a 76 per cent stake in the debt-laden carrier after no buyer showed interest. AIATSL was incorporated in June 2003 with the objective of carrying out the business of providing all types of services at airport. Industrial and business operations of AIATSL include rendering airport ground handling services such as those pertaining to passenger, ramp, security and cargo for Air India. The SPV would service the debt transferred to it by raising extra-budgetary resources as well as monetising non-core assets of AI, without putting any immediate burden on the exchequer. With cash crunch likely to continue due to rising fuel costs, the Centre will infuse an additional Rs 2,056 crore in the current financial year to help AI service loans and pay salary.
The additional budget support means the government’s Rs 30,231-crore equity infusion under a 10-year turnaround and financial restructuring plan will come to an end two years ahead of its schedule in FY21. Air India has received an equity infusion of Rs 28,175 crore till date. FE