Air India privatisation: Govt to transfer ₹16,000 cr unpaid bills to AIAHL

By Livemint
The Air India privatisation transaction to Tata Group is expected to be closed by December-end (AFP)

The government will transfer about 16,000 crore of unpaid fuel bills and other pending dues that Air India owes to suppliers, to a special purpose vehicle before handing over the loss-making airline to the Tata Group, news agency PTI reported quoting a senior official.

Last Friday, the government announced that the Tata group has made a winning bid for the national carrier at 18,000 crore.

As on August 31, Air India had a total debt of 61,562 crore. The Tata group will assume 15,300 crore of Air India’s debt with the remaining 46,262 crore taken over by the government’s Air India Asset Holding Ltd (AIAHL), a special company set up to hold half of the airline’s loans, four of its units and non-core assets. The Tata group will also have to pay 2,700 crore in cash to the government.

As a precursor to Air India sale, the government in 2019 had set up a special purpose vehicle -- AIAHL -- for holding debt and non-core assets of the Air India group.

AIAHL will also be saddled with 75% of the airline's debt that the Tata Group is not taking over. Besides the debt, the non-core assets of Air India, including land and building, valued at 14,718 crore are being transferred to AIAHL.

The excess liability going to AIAHL comprises unpaid fuel bills to oil companies, airport operators and vendors, said Tuhin Kanta Pandey, Secretary to the Department of Investment and Public Asset Management - the department running the privatisation programme of the government.

Pandey said he does not expect these dues to increase much by December-end as the government would continue to support the airline's operations by giving the 20 crore fund required daily to maintain it as a going concern.

Before the handover of the airline to Tatas, the government would again work on the balance sheet of Air India for the remaining 4-month period (September-December) and whatever liabilities arise would be transferred to AIAHL.

As much as 15,834 crore due to operational creditors, like those for fuel purchases and other day-to-day operations, as of August 31 too would be transferred to AIAHL, Pandey said.

"The dues to operational creditors may not go up further in the September-December period if the government continues with the funding... They are dependent on 20 crore/day, if the government shuts down funding then the dues will add up. So more or less it will not very much increase," Pandey said.

The government has been incurring per day expenditure of 20 crore to keep Air India afloat. Excessive debt in the airline's balance sheet had pushed equity value to negative at (-) 32,000 crore and the option before the government was to either privatise or close it down.

Between 2009-10 and till now, the government has infused over 1.10 lakh crore into the ailing airline. This includes 54,584 crore as cash support and 55,692 crore as loan guarantee.

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