Selling The White Elephant’s Tusks: Government Eyes Rs 9,000 Crore From Sale Of Air India’s Land, Real Estate

Swarajya Staff

Dec 03, 2018, 05:19 PM | Updated 05:18 PM IST

Air India Boeing 747 Jumbo Jet (Sipra Das/The India Today Group/Getty Images)
Air India Boeing 747 Jumbo Jet (Sipra Das/The India Today Group/Getty Images)

The Union Government is working on a concerted plan to reduce Air India’s debt so that when the plan for the strategic sale of the airline is revived, potential investors may find it lucrative to purchase the carrier, Press Trust of India has reported.

The government hopes to reduce the Rs 55,000 crore debt burden of Air India to make it competitive and secure a better valuation in the strategic sale.

Last week, the Civil aviation secretary R N Choubey said the government would transfer about Rs 29,000 crore of Air India’s debt to a special purpose vehicle.

Finance Minister Arun Jaitley headed ministerial panel approved transferring Rs 29,000 crore debt to a special purpose vehicle (SPV) - Air India Asset Holding Company. After the transfer is in effect, the national carrier’s annual interest outgo will decline from Rs 4,400 crore to Rs 1,700 crore.

The ministerial panel also cleared a proposal for strategic sale of Air India's ground handling subsidiary, Air India Air Transport Services Ltd (AIATS). The proceeds from the strategic sale will be used to offset the huge debt Air India is currently saddled with. AIATSL earned Rs 61.66 crore profit in the financial year 2016-17.

The Government is hoping to mop up about Rs 9,000 crore by selling off land and real estate properties of debt-laden Air India. The funds raised through sale of the properties would be used to reduce the Rs 29,000 crore debt, held in the SPV.

“We are looking to raise about Rs 9,000 crore from sale of land and property assets of Air India. These include Airlines House in Bombay, realty property in Delhi's Vasant Vihar and land in Baba Kharak Singh Marg, next to Connaught Place," an official said.

The national carrier had in September invited bids to sell its properties located across India. The airline had put up for sale 28 flats in Mumbai, seven flats in Ahmedabad, and two flats and an office space in Pune, besides several other properties across the country.

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. In June, the GoM then decided not to go ahead with Air India stake sale in an election year.

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