The government of India is currently considering options to raise money from state airline Air India, going beyond Niti Aayog's recommendation of taking debt of over £3 billion. Sources said one of the many options is to go for a reverse bid that will pit the £3 billion debt against rights such as landing slots and other operating assets that are owned by the national airline, giving it a much-needed edge over its rivals.
AI has almost £6 billion debt on its books, of which £2.2 billion is linked to its aircraft purchase programme. There also are loans of around £600 million to 700 million related to its operations, which will go with the airlines. Niti Aayog suggested that the remaining amount could be taken over by the government to make the airline an attractive proposition for the new buyer. “There are ways to improve the returns for the government which will be considered but at the moment these are all options and the panel of ministers will chart the best course of action,” a source said.
They said that writing off the amount will impose a burden on the exchequer as the government will have to take over the loans extended by banks, which have refused to restructure the loan as it is seen to be an unviable proposition. “Through a reverse bid, we can realise better value and also make the whole process more transparent.” Details including the extent of the sale will be worked out by a panel of ministers headed by Finance Minister Arun Jaitley as the government looks to push ahead with the stake sale.
Investment bankers said the other options were also possible and they could look at the global experience if they were mandated.
