NEW DELHI: The Centre on Tuesday approved the draft for inviting initial bids for disinvestment of Air India. The document inviting bids is likely to be out by January-end.
A high-powered group of ministers (GoM) and senior officials, at a meeting chaired by Home Minister Amit Shah, approved the Expression of Interest (EoI) as well as the share purchase agreement for Air India’s privatisation also approved further transfer of major portion of Air India’s debt to a special purpose vehicle (SPV) to make it a lucrative offer.
The government has also planned to pay off almost a third of the total outstanding amount to airports and other vendors and also waive off the working capital loan. The airline owes nearly Rs 22,000 crore to airports and other vendors. Other ministers part of the meeting were Nirmala Sitharaman (finance), Piyush Goyal (commerce) and Hardeep Puri civil aviation).
With the losses of Air India mounting, its disinvestment is among the top priorities of NDA 2.0 government. Sources said that to attract investors, the government has approved major debt transfer of the national carrier to the SPV. They said nearly 80% of the total debt will be transferred and the government is likely to keep only Rs 10,000 crore debt in the airline’s books. Nearly Rs 29,400 crore had already been transferred to the SPV earlier.
The total debt of Air India is over Rs 60,000 crore. The heavy debt was one of the main reasons the government’s first bid of Air India’s disinvestment failed in 2018. A senior official of the airline said that with the recasting of major portion of the debt, the carrier will attract potential investors as it is still a leader in many aspects, given its international routes, impressive fleet size and experienced staff. It also has the largest share in the international market among Indian carriers and has remained in top three in terms of domestic market share.