As the government is mulling various options to revive debt-ridden Air India, Niti Aayog has recommended strategic disinvestment of the national carrier so more of the public money is not spent on the loss-making airline.
In a report submitted to the Centre, the Niti Aayog has detailed a possible roadmap for Air India disinvestment, which includes writing off loans to the tune of Rs 30,000 crore, according to a report by the Times of India. The airline has a debt amounting to nearly Rs 50,000 crore, Finance Minister Arun Jaitley had said last week while he pitched for disinvestment of the loss-making carrier.
“Air India's market share today is around 14 per cent while the debt is Rs 50,000 crore while the government has not put in money in private carriers,” Jaitley had said.
Niti Aayog has proposed to transfer the aircraft-related loans and the working capital to the new owner while advising that the Centre should bear half the liability.
The government's think tank has suggested that the real estate assets of the company be hived off into a separate company before offering up to 100 per cent equity to a strategic partner. Air India owns prime properties in Mumbai's Nariman Point and also in Delhi.
Air India, which is surviving on a Rs 30,000 crore bail- out package spread over 10 years announced by the Manmohan Singh government in 2012, is working on ways to improve its financial position.
The carrier has suffered losses of about Rs 40,000 crore and has projected a cash deficit of Rs 3,000 crore for the current financial year. In 2015-16, the airline posted operational profit of Rs 105 crore on account of low fuel prices and increased passenger numbers but the annual interest burden itself is around Rs 4,000 crore.
Last fiscal, the airline is estimated to have earned a total revenue of Rs 21,000 crore while passenger revenue stood at Rs 16,500 crore.
Confirming that Niti Aayog has submitted a report, Civil Aviation Minister Ashok Gajapathi Raju said no option has been closed for the airline.
"NITI Aayog has made recommendations for making Air India strong and viable. All courses of action are being examined. We have not closed any option," Raju told reporters in the capital yesterday.
Asked about Air India and Indian Airlines merger that happened in 2007, which is seen as a reason for the problems of the national carrier, Raju said the clock cannot be put back on the deal.
Minister of State for Civil Aviation Jayant Sinha said whatever that would be done for Air India will be in national interest.
"We are considering all possible alternatives (for Air India)... We are discussing (what can be) the winning strategy for the airline," Sinha said.
While rumours of the government selling stake in the national carrier have been doing the rounds, there has been no official word on the same. The civil aviation ministry has been maintaining that it wants the airline to survive.
In the past also, there have been at least two significant attempts for disinvestment of Air India, but those efforts did not materialise.
The Central Bureau of Investigation (CBI) has decided to probe the controversial merger of Air India and Indian Airlines besides alleged irregularities in purchase and lease of aircraft by the two state-run carriers under the UPA government which caused "huge" losses to the exchequer.
Asserting that the government is proud of Air India, Raju said the ministry would cooperate with the CBI in respect of cases related to alleged irregularities at the airline in the past.
The probe agency has registered three FIRs and a preliminary enquiry (PE) to go into the controversial decisions made by the erstwhile UPA government with regard to the carriers, including surrender of profitable routes to favour private airlines.
The cases have been registered against unidentified officials of Air India, Ministry of Civil Aviation and others under charges of criminal conspiracy, cheating and corruption, CBI spokesperson R K Gaur said on Monday.
The CAG had in 2011 questioned the rationale behind the government's decision to order 111 airplanes for AI and Indian Airlines -- 48 from Airbus and 68 from Boeing -- for about Rs 70,000 crore in 2006.