BIG: Centre decides to proceed with disinvestment of national carrier Air India, debt rises to Rs 58,351 crore as of March 2019

In a major business decision, the Centre, on Thursday, has decided to go ahead with the disinvestment of the National carrier Air India, as announced by Union Minister for  Civil Aviation (Independent charge) Hardeep Singh Puri saying that this decision was recommended by the government-appointed Air India Specific Alternative Mechanism (AISAM).

He shared the process of disinvestment which started on June 28, 2017, in principle after the Cabinet Committee had approved the consideration of disinvestment of Air India and its five subsidiaries by constituting the AISAM.

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Following the appointment of AISAM, Puri shared that volatile crude oil prices & adverse fluctuations in exchange rates in March 2018, made it an inconducive atmosphere to proceed with disinvestment.

Puri added that while continued support from the Centre had resulted in improvement of financial and operational performance of Air India, the government had decided to go ahead with disinvestment.

In complete contrast, earlier in the day, the minister had said in the parliament that the present economic environment is not conducive for the sale of state-run carrier Air India in the immediate near future, citing the same reasons of oil prices that he claimed hindered Air India's disinvestment in 2018. He had added that the government will revisit the sale once global economic indicators including oil prices and foreign exchange conditions stabilize. 

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Earlier on Wednesday, Puri had shared in the Rajya Sabha that the grounded airline had a total debt of Rs 58,351 crore as on March 31 this year.

Previously in 2018, AISAM had earlier decided to sell 76 per cent in Air India and the buyer was required to take over Rs 24,000 crore debt of the carrier along with over Rs 8,000 crore of liabilities. However, the stake sale failed to attract any bidder when the auction process completed on May 31, 2018. At that time, Air India's total debt burden stood at Rs 55,000 crore. As a precursor to the strategic disinvestment of Air India, the Cabinet in February approved setting up of a special purpose vehicle (SPV) - Air India Assets Holding Company - to transfer Rs 29,464 crore worth loans of the national carrier and its four subsidiaries.