Govt Will Shut Down Air India Or Sell To Private Firms; Rs 23,000 Cr Debt Can Be ‘Absorbed’

With the huge debt and no other way around, the Union government will either have to privatize or shut down the loss-making Air India Ltd, as per the information given by the civil aviation minister Hardeep Singh Puri on Tuesday.

What Are The Choices?

Further, the government continues to struggle in finding buyers for the cash stripped carrier for the second time.

On top of that, the economic disruption caused by the coronavirus pandemic has made the situation even worse.

From the government’s part, Hardeep Singh said that if the government can, it will continue to run the flag carrier. 

However, with a huge debt over Rs 60,000 crore, they are left with the choice between privatization and closing down the airline, as Puri mentioned in the Rajya Sabha before the passage of the Aircraft Amendment Bill 2020. 

 He added, “We are confident that Air India will be given to a new owner to keep the flag flying high,”.

As of date, Air India has received an equity infusion of Rs 30,520.21 crore from the government since FY 2011-12, which is in the form of financial and cash support.

Scrapping Debt Condition

To make the deal more attractive for potential buyers, the central government has been advised to scrap debt conditions as it discourages potential buyers of Air India, as per a Bloomberg report.

So according to the new proposal, the potential buyers will be allowed to bid on the enterprise value and not on the entity value, as per the report.

As per the plan, Air India would be selling its 100 percent stake in Air India Express.

In addition to that, it will also be selling its 50 percent stake in equal joint venture Air India SATS Airport Services (AISATS). 

So with this deal, all three entities will be sold together and the new investor will have the full management control of the national carrier.

As the Government of India owns a 100 percent stake in the airline and its subsidiary Air India Express currently.

The government has already extended the deadline for bids for the fourth time in 2020 due to the spread of the coronavirus pandemic. 

Now the bidders have been asked to submit their bids by October 30, 2020, as per the latest announcement.