Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
RSS

News

Air India might shut-down if divestment process fails: CAPA India

Author: IANS/Monday, May 7, 2018/Categories: Aviation

Air India might shut-down if divestment process fails: CAPA India

New Delhi - National passenger carrier Air India might shut-down, if its ongoing divestment programme fails due to the terms and conditions set in its 'Express of Interest' (EOI) document.

According to aviation consulting firm CAPA India, it is critical for the central government to amend the labour and debt conditions for the divestment process to succeed.

"Three key themes emerging on @airindiain divestment: 1) Critical that terms in EOI - particularly for labour & debt - are amended, as successful bidder will need to invest in restructuring and absorbing losses for several years, in addition to consideration paid for 76 per cent," the consulting firm tweeted on May 4. 

"Three key themes emerging on @airindiain divestment: 2) Unless bidders confident that they will be ring-fenced from possible political risks if successful, this could prove to be a key reason for possible non-participation by some parties at RFP stage. #indianaviation 2 of 3." (sic)

Besides, the firm said that it estimates AI headed for "2-year losses of USD1.5-2.0 bn in FY19/FY20". 

The development comes few days after the central government extended the submission deadline for the EOI bids under Air India's divestment process to May 31, 2018.

The 'Corrigendum' issued by the Ministry of Civil Aviation on May 1 extended the last date for EOI bid submission to May 31, 2018 from May 14.

Consequently, the date for the "intimation to the Qualified Interested Bidders" (QIB) has also been extended to June 15 from May 28.

In addition, the ministry issued a separate document on clarifications sought by interested bidders regarding the divestment process.

On the total debt and liabilities which are expected to remain with AI at the point of divestment, the ministry clarified: "... As on 31st March 2017, including net current liabilities of INR 88,160 mn, aggregating to INR 333,920 mn will remain with AI and AIXL (no change for AI-SATS except in normal course of business)."

"Essentially, the amount of Rs 3,33,920 mn includes both debt and liabilities including net current liabilities."

The clarification document outlined that net current liabilities as Rs 88,160 million (Rs 8,816 crore) and "these will remain with AI and AIXL as these have been incurred in the course of business."

"After deducting INR 88,160 mn from INR 333,920 mn, the remaining figure of INR 245,760 mn is the debt and liability quantum that will remain with AI and AIXL."

On March 28, the central government had issued a Preliminary Information Memorandum (PIM) inviting "EoI" for the strategic divestment of AI, along with the airline's shares in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) from private entities including the airline's employees.

The central government owns 100 per cent equity of Air India. In turn, the airline holds full stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.

Accordingly, it has been planned to divest 76 per cent government stake in AI, 100 per cent in AIXL and 50 per cent in AISATS.

Print Rate this article:
No rating

Number of views (72)/Comments (0)

rajyashree guha

IANS

Other posts by IANS
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free