Sale of Air India: Government plans to monetize Alliance Air and other AI subsidiaries

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Following the historic privatization of Air India, the Union government announced that it would begin work on monetizing four of its other subsidiaries, including Alliance Air as well as non-core assets like land and buildings. a value ??14,700 crore, Secretary of the Department of Investment and Public Asset Management (DIPAM) Tuhin Kanta Pandey said on Sunday, Tata Sons won the Air India tender in Friday. ??18,000 crore to recoup the debt-laden airline after nearly seven decades.

The government had incurred an expenditure of ??20 crores daily to keep Air India afloat.

The Air India-Tata deal, which is expected to be finalized by the end of December, includes the sale of Air India Express and the ground handling arm AISATS. The cost includes a cash payment of ??2,700 crore and taking over ??15,300 crore of debt.

Meanwhile, the state-owned airline had a total debt of ??61,562 crore as of August 31. From this total, the Tata Sons holding company, Talace Pvt Ltd, will take over. ??15300 crore and the rest ??46,262 crore will be transferred to the Air India Assets Holding Limited (AIAHL) special purpose vehicle.

In addition, Air India’s non-core assets, including land and buildings, valued at ??14,718 crore, are also transferred to AIAHL. In addition, the commitments of ??As of August 31, 15,834 crore of contributions to operational creditors, such as those for fuel purchases, would be transferred to AIAHL.

Speaking to PTI, Pandey said his department will now get down to developing a plan to monetize Air India’s remaining subsidiaries that are with AIAHL and set off debts.

“There will be a plan to monetize the assets of AIAHL. It is still a very big task of clearing the liabilities of AIAHL and disposing of assets. ground, engineering and Alliance Air which needs to be privatized … Until Air India leaves, we could not do other things, ”said Pandey, who led the privatization of Air India .

Air India Assets Holding Ltd (AIAHL) was established by the government in 2019 to hold the debt and secondary assets of the Air India group. Four Air India subsidiaries – Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI) – as well as non essentials, paint and artifacts, as well as other non-operational assets, have been transferred to the SPV.

“Contributions to operational creditors may not increase further over the September-December period if the government continues funding … They depend on ??20 crore / day, if the government stops funding, contributions will add up. So more or less it won’t increase much, ”Pandey said.

After adjustment for all contributions to operational lenders and creditors as well as the assets of AIAHL, the net liability left to AIAHL is ??44,679 crores.

Notably, Air India will become the Tatas team’s third airline, giving it access to more than a hundred aircraft, thousands of trained pilots and crews, and lucrative landing and parking slots. in the whole world.

Tata Sons already owns 84% ​​of the capital of AirAsia India and 51% of the capital of Vistara.

Back home

Air India was founded in 1932 by Jehangir Ratanji Dadabhoy (JRD) Tata. It was originally called Tata Airlines until 1946 when the aviation division of Tata Sons was listed as Air India. In 1948, Air India became a publicly traded company and launched Air India International with flights to Europe under one of the country’s first public-private partnerships.

However, clouds of nationalization had hung over the civil aviation sector since independence. The airline was nationalized in 1953.

According to the agreement, Tatas will have to keep more than ??13,500 crore of Air India and Air India Express employees for one year, after which a voluntary pension scheme could be offered.

The conglomerate can go ahead with the merger and sell up to 49% stake after one year, but it provides business continuity for three years.

The Air India brand and eight logos would also be transferred to the Tatas, but they will be blocked for 5 years and with the clause that they cannot sell them to a foreign entity.

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