Preliminary Information Memorandum For Strategic Disinvestment of Air India issued

Speed Post News Network

New Delhi : Minister of State(I/C), Ministry of Civil Aviation, Hardeep S Puri,  addressing a presser on January 27, 2020,  informed that the newly constituted Air India Specific Alternative Mechanism (AISAM) headed by the Home Minister and comprising Union Ministers for Commerce & Industry, Finance & Corporate Affairs and Civil Aviation, as members, has approved the release of the Preliminary Information Memorandum (PIM) for inviting Expression of Interest (EOI) from the Interested Bidders (IBs) for Strategic Disinvestment of Air India.  He informed that the Government has released the PIM for seeking EOI for strategic disinvestment of Air India.

Puri informed that Air India along with Air India Express has 146 aircraft in its fleet 82 of which are owned by it; have worldwide bilateral rights and spread over domestic as well as international slots and added that during 2018-19, both Air India and Air India Express carried around 26.2 million passengers.

Air India and Air India Express have average aircraft age of 8 years which is among the youngest fleet. Twenty-seven Boeing -787 with Air India are as young as 5 years and 27 Airbus-320 Neo (CFM engines) are as young as 2 years.  Air India and Air India Express have almost 51% share of the international traffic to/from India among Indian carriers and 18 % share including global carriers (ex-India), according to a PIB release.

Pointing out that Air India has coverage of 98 destinations with 56 domestic and 42 international destinations, Puri informed that Air India offers 75 additional destinations through its secondary network of code share operations.  Air India and Air India Express had a combined revenue of Rs 30,632 crore in 2018-19, which is the highest among Indian carriers.  Air India + Air India Express employee cost as % of revenue is about 11% which is comparable to Indian carriers and much lower to International carriers.

AISATS provides in-house ground handling facilities at key metro airports – Delhi, Bengaluru, Hyderabad, Thiruvananthapuram, and Mangalore.  Even after infusion of about Rs.30,500 crore as per Turn Around Plan since 2012, Air India has been running into losses year after year.  Due to its accumulated debt of about Rs 60,000 crore, its financial position is in a very fragile condition.

A few of the key decisive parameters in the PIM are : Transfer of management control and sale of 100% shares of Air India along with Air India’s 100% stake in its subsidiary, Air India Express Limited and 50% stake in joint venture, AISATS; Freezing of Debt in Air India at Rs 23,286.5 crore which is approximately equivalent to the Written Down Value (WDV) of combined assets of Air India and Air India Express; the liabilities to be retained in Air India will be equal to certain current and non-current assets. Considering the combined figures as on March 31, 2019, the liabilities retained would be Rs 8,771.5 crore; the remaining debt and liabilities of Air India and Air India Express will be allocated to SPV (Air India Assets Holding Limited) ; the Air India with new investor will continue using the ‘Air India’ brand.