Air India might shut-down if divestment process fails

Team Udayavani, May 6, 2018, 10:43 AM IST

New Delhi: Air India may close down, if if its ongoing divestment programme fails because of the terms and conditions set in its ‘Express of Interest’ (EOI) report. 

As indicated by aviation counseling firm CAPA India, it is basic for the central government to change the labour and debt conditions for the divestment procedure to succeed. 

The consulting firm tweeted on May 4 which said “Three key themes emerging on @airindiain divestment: 1) Critical that terms in EOI – particularly for labour & debt – are amended, as successful bidder will need to invest in restructuring and absorbing losses for several years, in addition to consideration paid for 76 per cent,” 

“Three key themes emerging on @airindiain divestment: 2) Unless bidders confident that they will be ring-fenced from possible political risks if successful, this could prove to be a key reason for possible non-participation by some parties at RFP stage. #indianaviation 2 of 3.” (sic)

In addition, the firm said that it estimates AI set out toward “2-year losses of USD1.5-2.0 billion in FY19/FY20”. 

The improvement comes few days after the central government broadened the due date for the EOI offers under Air India’s divestment procedure to May 31, 2018. 

The ‘Corrigendum’ issued by the Ministry of Civil Aviation on May 1 broadened the last date for EOI offer accommodation to May 31, 2018 from May 14. 

Thusly, the date for the “hint to the Qualified Interested Bidders” (QIB) has likewise been reached out to June 15 from May 28. 

Likewise, the service issued a different record on illuminations looked for by intrigued bidders in regards to the divestment procedure. 

On the aggregate obligation and liabilities which are required to stay with AI at the purpose of divestment, the service cleared up: “… As on 31st March 2017, including net current liabilities of INR 88,160 million, accumulating to INR 333,920 million will stay with AI and AIXL (no change for AI-SATS aside from in typical course of business).” 

“Basically, the measure of Rs 3,33,920 million incorporates both labour and debt conditions including net current liabilities.” 

The elucidation report delineated that net current liabilities as Rs 88,160 million (Rs 8,816 crore) and “these will stay with AI and AIXL as these have been brought about over the span of business.” 

“Subsequent to deducting INR 88,160 million from INR 333,920 million, the rest of the figure of INR 245,760 million is the obligation and risk quantum that will stay with AI and AIXL.” 

On March 28, the central government had issued a Preliminary Information Memorandum (PIM) welcoming “EoI” for the key divestment of AI, alongside the carrier’s offers in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) from private substances including the aircraft’s workers. 

The central government 100 percent equity of Air India. Thus, the aircraft holds full stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.