Air India share sale: A seller gets only Rs 10,000 crore on a plane loan

The government is likely to transfer about Rs 20,000 crore of additional debt to Air India books to make it more expensive for buyers. The move will leave Air India with up to Rs 10,000 crore in debt.

This is a third of the Rs 33,992 crore debt that was passed on to the new owner during the process of refining last year. Potential buyers have shown the ability to & # 39; t take over debt debt.

As of March 31, Air India had a debt of 58,351 crore.

Though the company & # 39; Air India Alternative Special Mechanism (AIASM) & # 39; headed by Home Minister Amit Shah, who has yet to receive a response, it was revealed to the cabinet team that the move was necessary to make it attractive to buyers. EY's conversion advisor cited high debt as one of the reasons investors showed no interest in acquiring the airline last year.

In addition, the argument is that the annual cost of operating an Air India company is much more expensive for the government than the annual interest rate of Rs 50,000. The government has already invested around Rs 30,000 crore according to a package provided by the previous UPA system in 2012 for 10 years.

Air India share sale: A seller gets only Rs 10,000 crore on a plane loan

The government has already returned Rs 29,500 crore loan to Air India Asset Holding Limited (AIAHL). To prove this debt, SPV has already raised Rs 14,000 crore in three market loans.

It will raise about Rs 8,000 crore through a government bond guarantee during the week.

The deal becomes more expensive as most of the debt is returned to assets like Air India.

About Rs 8,000 crore is owed to the aircraft loan agreement. Financial leasing is one of the most expensive forms of aviation financing, in which lessee gets total ownership rights. The aircraft acquired under the investment lease agreement is considered to be the property of the company compared to the leasing agreement, which affects the cash flow of the company. Also, funding agreements can be canceled out looga paying bills so the debt of the buyer has to pay interest

Usually iibsadayaashu will receive the equivalent property if the loan is paid looga will need to take. This will include existing debt and part of the working capital that is common to mergers and acquisitions. This is a fair and clean platform for Air India's size flight and its capabilities, ”said someone involved in the sales process.

Air India has 32 aircraft, and has 37 aircraft for investment leasing, while its airline & # 39; Air India Express & # 39; which will also be sold in conjunction with Air India with 17 aircraft for lease as of 2018-19.