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Govt clears sale of Air India's subsidiary

Ground handling subsidiary, one of the non-core units, to be sold as govt tries to reduce airline's debt

Our Special Correspondent   |   New Delhi   |   Published 27.11.18, 08:30 PM

The strategic sale of Air India’s ground handling subsidiary AIATSL was cleared by a ministerial panel on Tuesday, as part of a strategy to privatise the non-core assets of the national carrier to lower its Rs 50,000 crore debt burden.

“The Alternative Mechanism (panel) has approved EoI (Expression of Interest) together with Preliminary Information Memorandum for Air India Air Transport Services Limited (AIATSL) sale,” an official told reporters here.


Proceeds from the sale would be used to pay Air India’s debt.

The panel on Air India’s divestment, headed by finance minister Arun Jaitley, has decided to proceed with the strategic sale through the divestment of 100 per cent ownership of AIATSL, the official added.

The sale would happen after transferring AIATSL to a special purpose vehicle (SPV), which has already been incorporated. The expression of interest would be issued after the transfer of AIATSL to the SPV.

In June this year, the government had suffered a setback when not a single bidder submitted EoI for the Air India strategic sale. It was the second time in nearly two decades when a stake sale plan of Air India had failed. In 2001 also, under the BJP government of Atal Behari Vajpayee, the divestment process was scrapped.

The ministerial panel chaired by Jaitley decided that the government would look at the sale of assets and subsidiaries of the national carrier to reduce the debt burden.

The government has prepared a list of the airline’s assets that could be hived off as part of the strategic sale plan for Air India and its subsidiaries, officials said.

Besides, Air India Air Transport Services Ltd (AIATSL), officials said, the disinvestment process in three other Air India subsidiaries — AASL, HCI and Air India Engineering Services Ltd (AIESL) — is likely to be initiated soon.

While AASL, under the name Alliance Air, provides regional air connectivity, HCI owns and operates two hotels in Delhi and Srinagar, among others.

AIATSL provides ground handling and cargo handling services. AIESL is mainly into maintenance, repair and overhaul of engines.

According to latest data, in 2016-17, AIATSL and Air India Express had posted profits. While AIATSL earned Rs 61.66 crore profit, AI Express reported a profit of Rs 297 crore.

Besides, catering services provider AISATS — a 50:50 joint venture between Air India and SATS Ltd — posted a profit of Rs 66.06 crore for fiscal year 2016-17. 

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