"An alternative mechanism has been in place for what should be done with Air India. It is a beautiful airline," the Minister said after inaugurating a solar power plant at the Kolkata Airport.
"Its (financial) books are very bad and is in a debt trap. The (payments burden of) interest rates are pulling down. We want to make it a vibrant airline."
The government has given in principle approval for...
strategic disinvestment of the national carrier.
Several options are being explored in this direction and lot of suggestions are coming in, he said, adding that private airline IndiGo expressed its "interests on the international operations of Air India".
In a related development, the government has reportedly decided that the sale of Air India will involve its core aviation assets packaged with low-cost subsidiary Air India Express and AI-SATS, a groundhandling joint venture with Singapore Airport Terminal Services (SATS).
All non-core assets, like the Air India building in Mumbai and other offices, will not be part of the sale and become part of the special purpose vehicle (SPV), said a government official, who didn’t want to be identified.
Core aviation assets include aircraft, slots at airports and flying rights to various countries. Both Air India Express, a nofrills overseas carrier, and AI-SATS are profit-making subsidiaries of the airline. While Air India Express is a fully owned subsidiary, Air India and SATS own 50 percent each of the ground-handling joint venture. The other Air India arms — profit-making Air India Air Transport Services and loss-making Air India Engineering Services — will be sold separately.
“Assets like Air India offices, residential quarters, land and even ticketing offices — as airlines today prefer internet booking over ticketing offices — will become part of the SPV,” said the official. “All non-core aviation assets will be transferred to the SPV.”
Air India has total debt of Rs 52,000 crore, of which about Rs 33,000 crore is on account of working capital loans.
Air India operates to 44 foreign destinations and 72 domestic destinations and has assets in each of these cities. The cabinet has already approved the divestment of Air India in June and formed a committee to decide on its modalities. IndiGo is the only airlines that has officially shown interest in buying Air India.
The Tata Group, which has stakes in Vistara and AirAsia India, has also been mentioned as a possible suitor. Companies like Bird Group and Celebi —both of which are involved in ground handling—have shown interest in that part of Air India's business.