Air India privatization: Rs 16,000 crore outstanding bill to go to AIAHL of government
A senior official said the government will transfer the unpaid fuel bills and other pending dues of around Rs 16,000 crore to a special purpose vehicle before handing over the loss-making airline to the Tata Group. Air India Assets Holding Limited (AIAHL), which will hold Air India’s non-core assets such as land and buildings, will also be affected by the airline’s 75 per cent debt that the Tata group is not taking.
Besides debt, additional liabilities going to AIAHL include unpaid fuel bills to oil companies, airport operators and vendors, said Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management – the department that runs the government’s privatization programme.
Pandey said he does not expect these dues to rise much by the end of December as the government will continue to support the airline’s operations by providing the necessary Rs 20 crore daily fund to keep it going.
Before handing over the airline to Tata, the government will again work on Air India’s balance sheet for the remaining 4 months period (September-December) and any liabilities that arise will be transferred to AIAHL.
As on August 31, Air India had a total debt of Rs 61,562 crore. Of this, Tata Sons’ holding company Tales Pvt Ltd will acquire Rs 15,300 crore and the remaining Rs 46,262 crore will be transferred to AIAHL.
In addition, non-core assets of Air India including land and buildings worth Rs 14,718 crore are being transferred to AIAHL.
Pandey said Rs 15,834 crore would also be transferred to AIAHL for operational creditors, such as fuel procurement and other day-to-day operations, by August 31.
“The dues of the operational creditors may not move forward in the September-December period if the government continues to fund… they are up to Rs 20 crore/day, if the government stops funding the dues will increase. So more or less it will Won’t grow much.”
The net liabilities with AIAHL as on August 31, after adjustment of all dues to lenders and operating creditors and assets of AIAHL, stand at Rs 44,679 crore.
The government is spending Rs 20 crore per day to keep Air India running. High debt in the airline’s balance sheet had pushed the equity value to negative (-) Rs 32,000 crore and the option before the government was to either privatize it or wind it up.
In 2009-10 and till now, the government has invested over Rs 1.10 lakh crore in the ailing airline. This includes Rs 54,584 crore as cash assistance and Rs 55,692 crore as loan guarantee.
The government on October 8 announced that salt-to-software conglomerate Tata has won a bid to acquire debt-laden national carrier Air India for Rs 18,000 crore.
This includes cash payments of Rs 2,700 crore and debt of over Rs 15,300 crore. The deal, which is expected to be completed by the end of December, also includes the sale of Air India Express and ground handling arm AISATS.
As a precursor to the sale of Air India, the government had in 2019 set up a special purpose vehicle – AIAHL – to hold debt and non-core assets of the Air India Group.
Air India’s four subsidiaries – Air India Air Transport Services Limited (AIATSL), Airline Allied Services Limited (AASL), Air India Engineering Services Limited (AIESL) and Hotel Corporation of India Limited (HCI) – with non-core assets, Paintings and artifacts, and other non-operating assets were transferred to the SPV.
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