Govt Notifies Air India Asset Transfer Agreement With AIAHL; Stage Set For Air India Handover To Tata Group
New Delhi, Jan 27 (PTI) The government has notified the agreement between Air India and special purpose vehicle AIAHL for the transfer of non-core assets, ahead of the national airline's takeover by the Tata Group.
The government had in October last year, inked the share purchase agreement with the Tata Group for the sale of national carrier Air India for Rs 18,000 crore.
The Tata Group is expected to take full control of the airline, it founded in 1932, on Thursday. The cash component of the deal would come once the handover process is completed.
The Tata Group would pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline's debt. The deal also includes sale of Air India Express and ground handling arm AISATS.
The transaction was to be completed by December 2021, but the deadline was later extended till January 2022, owing to longer-than-expected time taken to complete procedural work.
This will mark the return of Air India to the Tata fold after 67 years. The Tata Group had founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.
As a precursor to the handover process, the Department of Investment and Public Asset Management (DIPAM) on January 24, notified the framework agreement entered into by and between Air India Ltd and AI Assets Holding Ltd (AIAHL) for transfer of assets of the national carrier post it ceasing to be a public sector company.
AIAHL was set up in 2019, by the government for holding debt and non-core 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) -- along with non-core assets, painting and artefacts, and other non-operational assets, was transferred to the SPV.
In October last year, Tatas beat the Rs 15,100-crore offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100 per cent stake in the loss-making carrier.
As on August 31, 2021, Air India had a total debt of Rs 61,562 crore. Around 75 per cent of this debt or Rs 46,262 crore will be transferred to the special purpose vehicle, AIAHL, before handing over the loss-making airline to the Tata Group.
Besides, non-core assets of Air India, including land and building, valued at Rs 14,718 crore are also being transferred to AIAHL.
Tatas would not get to retain non-core assets such as the Vasant Vihar Housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.
Of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.
While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas' stable - it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
Air India will give it access to a fleet of 117 wide-body and narrow-body aircraft and Air India Express Ltd another 24 narrow-body aircraft besides control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas such as London's Heathrow.
Air India started suffering losses every year since its merger with Indian Airlines in 2007-08. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012. However, the TAP did not work out and Air India continued to reel under losses with the government giving Rs 20 crore/day to keep the airline afloat.
Over the last decade more than Rs 1.10 lakh crore was infused by way of cash support and loan guarantee in the loss making airline to keep it afloat. The airline is suffering losses of Rs 20 crore/day currently.
On a standalone basis, Air India reported a net loss of Rs 5,422.6 crore during the April-September period of the current fiscal ending March 2022.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.