The national carrier of India, Air India is planning to sell its properties and land parcels across the country. The issue was discussed between civil aviation minister Ashok Gajapathi Raju and finance minister Arun Jaitley to decide the process regarding it.
Sources who were privy to the discussions say the idea is to sell real estate assets in cities, airport locations, and airline offices at prime locations. For this a consultant will be appointed to make a thorough inventory report of the assets and fix a proper valuation for them. The entire process will be reviewed by a committee, which will consist of secretary-level officials from the civil aviation ministry and finance ministry, people from Air India, and a retired judge.
“Air India has a vast bank of immovable properties, which have been accumulated over a period of time at various locations in India and abroad. Some of the properties are lying unused for a long time. Besides these, there are some locations from where the airline has stopped functioning; the idea is to sell those assets to see how much it can reduce the company’s debts,” an official close to the developments said, reported Business Standard.
Rajiv Nayan Choubey, civil aviation secretary was asked about the meeting between Raju and Jaitley said that government is looking at all options. “At this stage, we are considering all options and we cannot say as to what will be the final decision,” Choubey said.
Air India is already under a massive debt of Rs 46,570 crore. Around Rs 16,000 crore of the total debt is on account of aircraft loans which were raised partially from Export-Import Bank of India, foreign institutions and through non-convertible debentures. The aircraft loans are guaranteed by the central government. The remaining is working capital loan raised from a consortium of 25 banks led by government owned State Bank of India.
This is not the first instance that company has decided to sell its assets. The previous government headed by Congress led United Progressive Alliance (UPA) had also advised selling properties as a part of plan approved in 2012.
Arun Jaitley, finance minister said that regarding the privatisation of Air India, the decision lies with the civil aviation ministry and they will look in to the matter. According to Business Standard despite Niti Aayog’s suggestion of a complete sell-out, the government may not cede control over the airline, and instead attempt a turnaround by a debt-equity swap with lenders, sale of non-core assets and appointment of professionals to run the airline. Officials speaking on condition of anonymity said the control of Air India by government is important because of its strategic importance in a sector that has a few private players.
“If you see Air India’s performance in terms of pure operational metrics, over the last two years it has done well, the debt issue has pinned them down, selling off non-core assets can be used to retire some of the debt burden,” a senior official said. A sale of the assets can generate more than Rs 10,000 crore, the official said.