Sale of an Air India stake: the government expects better market conditions

The CAMC on Wednesday approved the increase in expenses for the operation and maintenance of Air India VVIP aircraft to 534.38 crores plus taxes for 2016-17. (Figurative Image)

The government decided to wait three to four months before seeking a divestment of the national carrier Air India because of prevailing market conditions and particularly high fuel prices, said the Minister of Transport. the Union, Nitin Gadkari. Wednesday. The proposed government-sponsored investment sale in Air India failed to attract a first bidder when the bid deadline ended May 31st. The minister said that given the high price of fuel, the viability of the move would be judged before the disinvestment process.

"The market situation is not suitable for the disinvestment of Air India now and in this context, we maintain a policy of waiting and monitoring for the next three to four months," said Mr. Gadkari, according to a report from the ITP. According to the Air India divestment plan, the government had proposed to sell 76% of the capital of the national airline with the total sale of the Air India Express stake and the sale of its 50% stake in Air India SATS Airport Services Pvt Ltd., which is a 50:50 joint venture with SATS based in Singapore.

At the end of March 2017, Air India had a debt of about 48,877 rupees. Of the total amount, Rs 17,360 crore was related to aircraft and Rs 31,517 crore related to working capital loans. In May, Air India's market share rose to 12.8%

Meanwhile, the Cabinet Committee on Economic Affairs on Wednesday approved a proposal to increase spending on energy. Operation and maintenance of the Air India VVIP. aircraft at Rs 534.38 crore plus taxes for 2016-17, from Rs 336.24 crore that was set in October 2011. Air India hires the aircraft "Special Extra Section Flights" (SESF) or VVIP such as the Boeing B747-400 for the president, the vice president and the prime minister. The costs of these flights are reimbursed to Air India by the respective departments.

The CAMC gave its approval to increase the expenses for Air India's ESA operations by Rs336.24 crore plus applicable taxes to Rs.534.38 crore plus applicable taxes for 2016-17 with an annual escalation of 10% to offset the cost of living index and the fluctuation of the exchange rate for the maintenance of aircraft B747-400 ", said the government in a statement

.October 2011 in the costs Fixed maintenance, there has been a substantial increase in the expenses incurred by Air India on the maintenance of these aircraft due to the increase in the cost of living index, the depreciation of the rupee compared to the US dollar and the increase in cost the report says.

"It is therefore necessary to review the estimates / refunds provided to Air India since the year 2011-12 as the base price does not have the same value. has not been indexed to inflation. Since AI suffered financial losses, the airline can not afford to provide services below its cost. "

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