Niti Aayog cites 'fragile finances' for AI disinvestment:Sinha

Air India

The Niti Aayog cited Air India's "fragile finances" as the main reason for recommending the airline's disinvestment, Union Minister Jayant Sinha informed the Rajya Sabha today.

The Cabinet Committee on Economic Affairs (CCEA), on June 28, gave in-principle nod for the strategic disinvestment of Air India and its five subsidiaries. In its recommendations, the Niti Aayog had given the rationale for the disinvestment of Air India and attributed the main reason as "fragile finances" of the company, Sinha said in a written reply.

"Niti Aayog in its report on Air India says that further support to an unviable non-priority company in a matured and competitive aviation sector would not be the best use of scarce financial resources of the government," he said. The minister of state for civil aviation was responding to a query on the main reasons behind the proposed disinvestment of Air India. "Air India has been incurring continuous losses and has huge accumulated losses," he said.

NITI Aayog submitted its recommendations (fourth tranche) on strategic disinvestment of the central public sector enterprises on May 12. To take forward the CCEA decision, an Air India Specific Alternative Mechanism has been set up.

The airline's total debt stood at Rs 48,876.81 crore at the end of March 2017. Out of the total amount, Rs 17,359.77 crore are aircraft loans while Rs 31,517.04 crore are working capital loans. "The rates of interest on aircraft/ working capital loans are linked to the respective bank's prime lending rates/base rate/labour plus margins prevalent at the time when these loans are taken," Sinha said.

Till March 2017, Air India purchased 86 aircraft, including Boeing 787-8s and Airbus 320s. "Out of the 23 B-787 aircraft, 21 B-787 Dreamliner aircraft have been acquired under the Sale and Lease Back (SLB) arrangement and the remaining 2 aircraft have been procured under bridge loans till their SLB financing is finalised. "As per the turnaround plan, approved by the government for Air India, these aircraft were to be procured by Air India under SLB arrangement," the minister said.