The government has finalised a revival plan and a financial package for struggling Air India, which includes shedding of about Rs 29,000 crore of debt, Minister of State for Civil Aviation Jayant Sinha told CNBC-TV18 on Thursday.
“The revival plan for Air India has been completed. We have discussed it in parliament, we have discussed it in the media as well. There are multiple steps that we are taking but the first and most important thing that we are doing for Air India is a financial package which includes shedding of about Rs 29,000 crore of debt which goes to the Special Purpose Vehicle (SPV), leaving the airline with about Rs 25,000 crore of debt. We have also pumped in a lot more equity into Air India, which has happened through the supplementary in the budget, which should be coming into Air India right now. And of course with oil prices having come down, Air India once again at an operating level continues to do we well," Sinha said at the CNBC-TV18 Indian Business Leader Awards on Thursday.
But challenges still remain for the debt-ridden carrier.
"The challenge for us in Air India has continued to be the legacy burden – the debt that was accumulated in the past because of all the mistakes and all of the calamities that really were foisted on to Air India and made things very difficult for Air India, I think those are behind us now. At an operating level, we will continue to strengthen and improve Air India with best in class business processes, world class professional management and also doing whatever we can to motivate and improve working conditions for the workforce,” he said.
Speaking about debt reduction target specifically, Sinha said, “That is an ongoing process. The important part of it in the revival plan was to be able to shed Rs 29,000 crore through the SPV. We will of course refinance Rs 25,000 crore that has left in more advantageous ways and we will continue to work at it so that we can restore Air India financially to the best possible situation that we can do and of course, there is further disinvestment that is required. We are looking at the subsidiaries, we are working with the non-core real estate, so there is a whole host of things that are part of the revival plan that we are embarked on.”
On monetisation of subsidiaries of real estate assets, Sinha said, “It is an ongoing process. We have to go through the disinvestment process, take the bids, see how they do, similarly in the non-core real estate, we have gone through a process by which we are selling off some of the flats, selling off some of the surplus real estate, so it is an ongoing process to continue to strengthen Air India.”
With regards to the Jet Airways resolution plan, Sinha said, “The various stakeholders in Jet Airways are working on a resolution plan and we are hopeful that resolution plan that works for all the different parties will emerge and that is a commercial set of negotiations that are underway right now. So let us wait for that process to come to closure.”
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