Air India Disinvestment Takes Off: 10 Things To Know

Air India Disinvestment Takes Off: 10 Things To Know
The government has injected $3.6 billion since 2012 in Air India.
  1. Apart from Air India Express and Air India SATS Airport Services, other subsidiaries of Air India Group like AIESL (Air India Engineering Services Ltd), AIATSL (Air India Air Transport Services Ltd), HCI (Hotel Corporation of India) and AASL (Airline Allied Services Ltd) "will not be part of the proposed transaction", according to the Preliminary Information Memorandum (PIM) issued on Wednesday.
  2. Private entities should have a net worth of Rs 5,000 crore to be eligible to send in their Expressions of Interest, it noted. The entity is also required to have reported a positive profit after tax in at least three of the five preceding financial years.
  3. However, if the member of the consortium is a scheduled airline operator in the country, the condition to meet minimum share of net worth/ACI requirement shall not apply to such member provided equity shareholding of such member is restricted to maximum of 51 per cent of paid up equity share capital of the consortium, the document said. 
  4. Companies including low-cost Indian carrier IndiGo, owned by InterGlobe Aviation, Tata Group and Turkey's Celebi Aviation Holdings have expressed an interest in buying some of Air India's operations. Singapore Airlines has also said the company has an open mind about making an initial bid.
  5. In case of a foreign airline, the document mentioned, the requirement to meet the minimum share of the Net Worth/ACI requirement shall remain applicable.
  6. Debt: The document disclosed that the "existing debt and liabilities of AI and AIXL as on 31st March, 2017 are being reallocated and it is expected that debt and liabilities, including net current liabilities of Rs 88,160 million, aggregating to Rs 333,920 million will remain with AI and AIXL". The balance debt shall be allocated to Air India Asset Holding Ltd which is 100 per cent owned by the GoI subject to receipt of requisite approvals from lenders and regulators, as applicable.
  7. Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Kumar Gupta said that non-core assets like buildings and others will be transferred to the SPV or Special Purpose Vehicle. "Only the core assets which are essential for operation, they are being transferred with Air India. All non-core assets are being hived off to the SPV. It will be separately monetized," he said.
  8. Besides, the document had revealed that "Confirmed selected bidder" will be required to be invested in the airline for at least three years and keep the "substantial ownership and effective control" of both Air India and Air India Express vested with Indian nationals.
  9. Air India has six subsidiaries – three of which are loss-making – with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities. 
  10. Currently, the combined entity of AI and AIXL has an extensive network connecting around 43 international destinations and around 54 domestic destinations. The entity operated a fleet of 138 aircraft as of December 31, 2017 comprises 69 Airbus and 69 Boeing plans.
(With inputs from agencies)
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