The government has geared up to revive the airline that sits on accumulated losses of Rs 30,000 crore and has unpaid debt of over Rs 55,000 crore
Debt-laden Air India is gearing up for another round of “financial assistance” from the government as Centre warms up to revive the state carrier, Moneycontrol has learnt.
In an exclusive conversation with Moneycontrol, Pradeep Kharola, chairman and managing director, Air India, said that the government has initiated discussions regarding the same.
“They will give us some financial assistance… The quantum is being discussed as of now,” Kharola said.
Cash starved Air India has been under severe financial stress due to high air turbine fuel (ATF) prices and falling market share. The airline has been bleeding for over a decade and has received support from the government “from time to time”.
Aviation secretary RN Choubey had recently told reporters that the airline was being provided financial assistance “by way of equity and guarantee by the government from time to time”.
“Close to Rs 1,600 crore of equity infusion has been done in the airline so far,” Kharola said.
The government has geared up to revive the airline that sits on accumulated losses of Rs 30,000 crore and has unpaid debt of over Rs 55,000 crore.
Under a newly devised revival plan for AI, the government has decide to transfer more than half of its debt to a special purpose vehicle (SPV), Air India Asset Holding Company Ltd., in order to clean up the carrier’s balance sheet.
“Currently, there is a debt on AI's books of accounts, which is required to be serviced from its revenues, and over which there are other collateral charges. The idea is to move this debt from Air India to this SPV with government's guarantee, leaving AI with balance debt of Rs 26,000 crore on its books," a senior government official had told Moneycontrol.
He said that the government will sell the non-core real estate assets of the airline to liquidate the debt it will take over.
"As and when the non-core assets are sold, the residual amount of debt value in the SPV will keep getting reduced," the official said.
Kharola said that the airline has non-real real estate assets worth more than Rs 8,000 crore which it plans to sell.
“We are disposing these in installments to raise funds,” he said.
According to sources, the airline is expected to sell Airlines House in Mumbai and realty properties in Delhi’s Vasant Vihar area and on Baba Kharak Singh Marg near Connaught Place. In September, it had also invited bids for its properties located across India. These include Around 28 flats in Mumbai, seven flats in Ahmedabad, and two flats and an office space in Pune have been put on sale.The government has also announced to sell AI’s Air India Air Transport Service Ltd (AIATSL) through the newly constituted SPV.