On October 8, the government announced that software salt conglomerate Tatas had won the bid from heavily indebted national carrier Air India for ??18,000 crores.
This includes a cash payment of ??2,700 crore and taking over ??15,300 crore of debt. The deal, which is expected to be finalized by the end of December, also includes the sale of Air India Express and the ground handling arm AISATS.
Speaking to PTI, Pandey said the Department of Investment and Public Asset Management (DIPAM) will now work to develop a plan to monetize Air India subsidiaries that are with the ad hoc vehicle. AIAHL and offset liabilities.
“There will be a plan to monetize the assets of AIAHL. It is still a very big task of clearing the liabilities of AIAHL and disposing of assets. ground, engineering and Alliance Air which is to be privatized, ”said Pandey, who led the privatization of Air India.
“It (the sale of subsidiaries) could not start because it is all closely linked. Unless and until the departure of Air India, we could not do other things,” he said. added.
In anticipation of the sale of Air India, the government had set up in 2019 a special purpose vehicle – Air India Assets Holding Ltd (AIAHL) – to hold the debt and non-core assets of the Air India group.
Four Air India subsidiaries – Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI) – as well as non essentials, paint and artifacts, as well as other non-operational assets, have been transferred to the SPV.
Air India had a total debt of ??61,562 crore as of August 31. From this total, the Tata Sons holding company, Talace Pvt Ltd, will take over. ??15300 crore and the rest ??46,262 crore will be transferred to AIAHL.
In addition, Air India’s non-core assets, including land and buildings, valued at ??14,718 crore, are also transferred to AIAHL. In addition, the commitments of ??As of August 31, 15,834 crore of contributions to operational creditors, such as those for fuel purchases, would be transferred to AIAHL.
Pandey said that between September 1 and December 31, just before closing the deal, the government would run a balance sheet on Air India.
“Contributions to operational creditors may not increase further over the September-December period if the government continues funding … They depend on ??20 crore / day, if the government stops funding, contributions will add up. So more or less it won’t increase much, ”Pandey said.
After adjustment for all contributions to operational lenders and creditors as well as AIAHL’s assets, the net liability left to AIAHL is ??44,679 crores.
The government has incurred daily expenses of ??20 crores to keep Air India afloat. Excessive debt in the airline’s balance sheet had pushed equity value negative at (-) ??32,000 crore and the option before the government was to privatize or close it.
Between 2009-2010 and now, the government has injected more than ??1.10 lakh crore in the troubled airline. This includes ??54,584 crore as cash support and ??55,692 crore as loan collateral. Although this is the first privatization since 2003-04, Air India will be the Tatas team’s third airline brand and will give it access to more than a hundred planes, thousands of pilots and trained crews, and lucrative landing and parking slots. worldwide. Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was then called Tata Airlines. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948 Air India International was launched with flights to Europe.
Tata will have to hold back more ??13,500 crore of Air India and Air India Express employees for one year, position to which VRS could be offered.
The terms of the deal allow Tata to move forward with the merger and sell up to 49% stake after one year, while ensuring business continuity for three years. The Air India brand and eight logos would also be transferred to the Tatas, but they will be blocked for 5 years and with the clause that they cannot sell them to a foreign entity.
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