Taking forward the process of the Centre disinvesting its stake in Air India, senior bureaucrats at the Civil Aviation Ministry, along with the airline’s officials, held a meeting on Friday to discuss various aspects of the share sale process including finalisation of audited accounts, preparation of business plan projecting the financials of the company, and employee-related matters.
The government plans to sell Air India, along with its subsidiary Air India Express and its 50 per cent stake in ground handling company Air India-Singapore Airport Terminal Services Ltd (AI-SATS). The airline’s subsidiaries, such as regional carrier Alliance Air, Air India Engineering Services Ltd (AIESL) and ground handling arm Air India Air Transport Services Ltd (AIATSL), are expected to be sold separately.
In Friday’s meeting, chaired by the Secretary of Civil Aviation Pradeep Singh Kharola, issues related to transfer of AIATSL to Air India’s special purpose vehicle were also discussed.
While specific proposals were not finalised on Friday, any proposal that may be readied will need to cleared by a group of ministers headed by Home Minister Amit Shah. In the previous disinvestment process of Air India, not a single bid was received and some of the main reasons listed for the lack of interest were the high debt-level of the airline and government’s plan to hold 23 per cent stake in the disinvested entity.
After the first attempt at disinvestment, the government chalked up a plan to take over part of the debt before selling the airline. “The idea is that only so much debt should be bundled with the airline so that it is serviceable by the revenues generated by the carrier,” a senior Aviation Ministry official said.
At present, the special purpose vehicle, Air India Asset Holdings Ltd, has raised around Rs 22,000 crore through issue of bonds that will be used to repay the existing debt of the airline that stands at about Rs 58,000 crore.
In the meeting under the Civil Aviation Secretary, officials also discussed review of lending and lease agreements to identify restrictive covenants or approvals required for the stake sale process. According to a Civil Aviation Ministry official, the transaction advisor will be asked to submit a detailed note on how to handle pending debt-related issues, including loans raised from foreign banks.
Among the process-related matters discussed in Friday’s meeting, were issues pertaining to use of Air India brand in its subsidiaries that are being sold separately.
According to officials, a number of brands and logos currently in use by the airline’s subsidiaries correspond to the parent company’s brands and a decision has to be taken on whether the use of these brands should be allowed after disinvestment.
In addition to this, several staff-related matters, such as a package for employees, provident fund-related issues, and settlement of arrears, in context of the stake sale process were also discussed in the meeting.