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Latest On Air India Sale In 10 Points: Government Prefers Domestic Buyer

Earlier this year the government said it would sell its stake in Air India but it has yet to decide what to do with the carrier's debt burden.

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Latest On Air India Sale In 10 Points: Government Prefers Domestic Buyer

Currently, Air India has a debt burden of more than Rs 50,000 crore.

The government would prefer selling Air India, its debt-laden carrier to a domestic buyer, news agency Reuters reported citing a government source on Monday. It is mulling to sell the airline's various businesses - which include ground-handling, domestic operations and international flights - in parts, the report added. The state-run carrier, which is under a debt burden of over Rs 50,000 crore, got an in-principle nod from the government for divestment of its stake sale in June.
Here is your 10-point cheat-sheet to this story:
  1. The government set up a ministerial group headed by Finance Minister Arun Jaitley to look into the modalities of the national passenger carrier's divestment process. The group has been mandated to guide the strategic divestment process and to decide on key issues such as treatment of Air India's debt and hiving-off of its assets.
  2. Following the Union Cabinet's "in-principle" approval, the ministry received two proposals, one each for the airline's international operations and for its assets from Bird Group and IndiGo.
  3. Tata Group, which originally founded Air India, in 1930s, has also shown an interest in buying the government's stake.  Tata would "definitely look" at Air India once the government finalised the privatisation process, N Chandrasekaran, chairman of Tata group's holding company Tata Sons, told a television channel reported.
  4. Last month, the government invited bids to appoint financial and legal advisors for the sale process.
  5. In September, the government also invited applications for an asset valuer for the national carrier as well as its subsidiaries and overseas offices. According to the tender document floated by civil aviation ministry, the asset valuer will have to carry out the valuation of land, buildings, aircraft, engines, stock inventory of spares, maintenance facilities, furniture, office appliances and computer systems, among others. This exercise will have to be conducted for the airline, its subsidiaries, joint ventures as well as its offices across the world. 
  6. However, bids by a consortium or a group of bidders were not allowed and proposals were supposed to have been submitted by today.
  7. Air India has five subsidiaries --Air India Express Limited (AIEL), Air India Air Transport Service Limited (AIATSL), Air India Engineering Services Limited (AIESL), Airline Allied Service Ltd (AASL) and Hotel Corporation of India (HCI). It also has a joint-venture with Singapore Air Transport Services (SATS) called AISATS. 
  8. The airline group serves 42 international destinations and over 70 domestic stations. It has an operating fleet of 142 aircraft comprising 65 A320 aircraft, 15 B777 aircraft, 24 B787 aircraft, 23 B737-800, 4 B747 aircraft and 11 ATRs.
  9. Once the nation's largest carrier, Air India's market share in the booming domestic market has slumped to 13 per cent as private carriers expanded.
  10. Air India is planning to raise $555 million by way of bridge loan for the purchase of three Boeing aircraft, according to a tender document, as reported by Reuters today. It would be taking delivery of three B777-300 ER planes early next year. (With Agency Inputs)


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