Air India sale: Government trims debt to Rs 23,286 crore, reduces net-worth criteria of bidders

After a failed attempt to divest stake in Air India, the government has now decided to fully exit the airline. On January 27, the government invited fresh bids for the national carrier.

But this time, the government has tried to entice bidders with revised conditions. Bidders of Air India will now be taking on a debt of Rs 23,286 crore as opposed to the earlier Rs 62,000 crore-debt.

The government has also reduced the net worth criteria for the bidder from earlier Rs 5,000 crore to Rs 3,500 crore.

This, as per the EoI document, is the amount that was taken mainly for aircraft purchases and is currently secured against government guarantees. These guarantees, however, will lapse once the new buyer comes into the picture.

From around Rs 5,348 crore in FY18, Air India's net loss in FY19 soared to Rs 8,556 crore. On the whole, the aircraft has a total liabilities worth Rs 52,000 crore. However, the government had already parked nearly Rs 30,000 crore out of this in a special purpose vehicle (SPV). This move was aimed at attracting new suitors in the fresh bidding round for the airline.

Also Read | Air India sale: EoI out, govt to completely exit airline

As opposed to the first attempt made by the government to sell stake, management control will now also be fully transferred to the buyer.

The government is looking to make a full exit from Air India this time, via the 100 percent stake sale. It has given an in-principle approval for the strategic disinvestment of Air India by way of transfer of management control and sale of 100 percent equity share capital of the airline held by the government. This, the document read, would include AI's shareholding interest if 100 percent in Air India Express (AIXL) and 50 percent in Air India SATS (AISATS).