₹20 crore per day: How much amount the government gives Air India to fly

While the opposition Congress attacked the family’s decision to sell silver, DIPAM secretary Tuhin Kanta Pandey said what Tatas are getting is not a cash cow, but an airline that is bleeding out where obsolete planes need to be refurbished and refurbished. The throttle needs to spend money to be unable to touch any employee for a year and be able to resize the staff only after paying VRS.

“There it will not be a very easy task. The only benefit is that they (the new owners of Air India) are paying the price they think they can manage. They deposit to meet the losses for years.” We are not taking excessive debt. We are continuing this as an ongoing concern. This process has saved huge amount of money of the taxpayers in the long run.”

Earlier this month, the government accepted a proposal by Tata Group’s holding company Tales Pvt Ltd to make payments. ₹2,700 crore cash and acquisitions ₹15,300 crore of the airline’s debt.

As on August 31, the total debt of Air India was ₹61,562 crore. About 75 percent of this loan or ₹Rs 46,262 crore will be transferred to AIAHL, a special purpose vehicle, before the loss-making airline is handed over to the Tata Group.

Tata will not get to retain non-core assets such as Air India’s Vasant Vihar Housing Colony, Air India Building at Nariman Point in Mumbai and Air India Building in New Delhi.

Pandey said, “We have only allowed (Tata Group) to be used for two years, but within two years we have to work out a monetization plan to sell it so that the money can be used to meet the liabilities of AIAHL. to be done.”

Of the 141 Air India aircraft received by Tata, 42 are leased aircraft while the remaining 99 are owned. Tata will also handle capitalized lease liability on account of operating leases ₹9,185 crores. In addition, some of these 141 aircraft have been grounded due to lack of engine and other maintenance. Also the obsolescence factor is that there are many that are not fuel efficient.

“We want to finish the handover quickly, because we’re paying ₹20 crore/day for running the airline. The new owner would need to invest a lot of capital because they would have to spend capital on aircraft improvements, refurbishments and placing new orders for obsolete aircraft. Only then will they be able to transform themselves. Also there are conditions that you cannot change the size of employees for 1 year, and after that in the second year you have to pay VRS,” Pandey said.

The government is selling its 50 per cent stake in ground-handling company AISATS along with its 100 per cent ownership of Air India and Air India Express.

The government, however, will transfer about ₹Air India Assets Holding Limited (AIAHL) has unpaid current liabilities of over Rs 16,000 crore over current and non-current assets such as fuel bills and other pending dues outstanding on Air India suppliers.

A letter of intent (LOI) has been issued to Tata on October 11, confirming the government’s willingness to sell its 100 per cent stake in the airline. Tata will now have to accept the LOI, after which the Share Purchase Agreement (SPA) will be signed. The pre-transactional conditions will need to be satisfied by the Tatas before actually handling the operations.

Normally within 14 days of acceptance of LOI, the SPA is signed.

While this will be the first privatization since 2003–04, Air India will be the third airline brand in Tata’s stable – it has a majority stake in Vistara, a joint venture with AirAsia India and Singapore Airlines Ltd.

Air India will provide it with access to 117 wide-body and narrow-body aircraft and 24 other narrow-body aircraft of Air India Express Limited along with 4,400 domestic and 1,800 international landing and parking slots as well as 900 at domestic airports. Slots at airports abroad, such as London’s Heathrow.

Tata defeated ₹Rs 15,100 crore offer and reserve price by SpiceJet promoter Ajay Singh-led consortium ₹Rs 12,906 crore earmarked by the government for the sale of its 100 per cent stake in the loss-making airline.

Air India was first put on the block under the Atal Bihari Vajpayee government when the newly created disinvestment ministry led by Arun Shourie offered the government a 40 per cent stake in the airline for sale. Foreign airlines including Lufthansa, Swissair, Air France-Delta, British Airways, Emirates and Singapore Airlines (SIA) expressed interest in buying the airline, but they backed out after the government ordered a local partner.

Hinduja, embroiled in the Bofors scam in two domestic companies, was disqualified, while Tata’s ally SIA withdrew citing “adverse environment and opposition to privatization”.

The privatization plan was revived in 2017 under Finance Minister Arun Jaitley when the government offered to sell 74 per cent in the airline. But the government’s decision to hold 26 per cent stake in the airline and auction rules did not lead to any bidders.

With 4 years of uncertainty over privatization, Air India was grappling with declining employee morale and growing inefficiencies within the organisation.

When Modi took office for the second time with a decisive mandate, the privatization of Air India was revived in 2020, under current Finance Minister Nirmala Sitharaman, with an offer to sell 100 per cent stake outright.

A new decision making mechanism was devised.

The government made the deal sweeter for Air India buyers, giving them the flexibility to decide on the amount of Air India debt they want to absorb. Bids were invited at the enterprise value of the company, which includes the debt as well as cash on the company’s balance sheet.

Air India has incurred losses every year since its merger with Indian Airlines in 2007-08. The Financial Restructuring Plan (FRP) along with the Turnaround Plan (TAP) for Air India were approved by the previous UPA government in 2012. However, TAP did not work and Air India was running at a loss to the government. ₹20 crores/day to keep the airline afloat. PTI JD ANZ MKJ