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Centre Approves Strategic Sale Of Air India Subsidiary AIATSL
Reservation and ticketing counter of Air India (Kalpak Pathak/Hindustan Times via Getty Images)
A ministerial panel headed by Finance Minister Arun Jaitley has cleared a proposal for strategic sale of Air India's ground handling subsidiary, Air India Air Transport Services Ltd (AIATS), The Hindu Business Line has reported.
The strategic sale will be made through the divestment of 100 per cent ownership of AIATSL. The government plans to complete the sale of AIATSL by March 2019. The government will hive off AIATSL to a special purpose vehicle (SPV) which is directly owned by the government. Once the transfer is executed, expressions of interest in the company will be invited.
AIATSL was incorporated in June 2003 with the objective of carrying out the business of providing all types of services at the airport. Industrial and business operations of AIATSL include rendering airport ground handling services such as those about passenger, ramp, security and cargo for Air India.
The proceeds from the strategic sale will be used to offset the huge debt Air India is currently saddled with. The airline had debts totalling around Rs 48,000 crore in 2017, and its losses were of a similar amount. Moreover, in the last financial year (2016-17), it had losses of Rs 5,765 crore, most of it due to high debts.
Department of Investment and Public Asset Management (DIPAM) has already identified assets of loss-making Air India which are to be hived off.
Two subsidiaries of Air India, AIATSL and Air India Express Ltd, are profitable. Air India Express is the low-cost airline of Air India that operates around 550 flights per week to 30 destinations including the Middle East and Southeast Asia.
While AIATSL earned Rs 61.66 crore profit in the financial year 2016-17, another subsidiary AI Express earned a profit of Rs 297 crore. The catering services provider AISATS - a 50:50 joint venture between Air India and SATS Ltd - posted a profit of Rs 66.06 crore in 2016-17.
The government had originally proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players. However, the stake sale failed to attract any bidders when the bidding process got completed on 31 May. In June, the GoM then decided not to go ahead with Air India stake sale in an election year.
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