Air India Sale snippets

The government is said to have decided that the sale of Air India will involve its core aviation assets packaged with low-cost subsidiary Air India Express and AI-SATS, a ground handling joint venture with Singapore Airport Terminal Services.

All non-core assets, like the Air India building in Mumbai and other offices, will not be part of the sale and become part of the special purpose vehicle.

Core aviation assets include aircraft, slots at airports and flying rights to various countries. Both Air India Express, a nofrills overseas carrier, and AI-SATS are profit-making subsidiaries of the airline. While Air India Express is a fully owned subsidiary, Air India and SATS own 50% each of the ground-handling joint venture.

The other Air India arms — profit-making Air India Air Transport Services and loss-making Air India Engineering Services — will be sold separately.

These were among decisions taken by the Air India sale committee headed by finance minister Arun Jaitley that includes the ministers of aviation, commerce and railways.

The SPV will house Air India’s non-aircraft debt as well as non-core assets. “Assets like Air India offices, residential quarters, land and even ticketing offices — as airlines today prefer internet booking over ticketing offices — will become part of the SPV,” said the official. “All non-core aviation assets will be transferred to the SPV.”

Air India has total debt of ₹52,000 crore, of which about ₹33,000 crore is on account of working capital loans, which will be transferred to the SPV. The rest is against aircraft purchases and will be included with the company that’s put up for sale. The national carrier, along with consultants hired for Air India’s divestment, has started identifying properties that will be transferred to the SPV.

“Air India operates to 44 foreign destinations and 72 domestic destinations and has assets in each of these cities,” said another official. The Cabinet approved the divestment of Air India in June and formed a committee to decide on its modalities. IndiGo is the only carrier that has officially shown interest in buying Air India.

The Tata group, which has stakes in Vistara and AirAsia India, has also been mentioned as a possible suitor. Companies like Bird Group and Celebi—both of which are involved in ground handling-—have shown interest in that part of Air India’s business.

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