Air India Business Should Be Restructured to Save It From Unsustainable Debts, Says Union Minister for Civil Aviation Suresh Prabhu

The government has offered several means such as offloading 76% equity share, transferring management to private entities, etc. to save Air India from debt, according to Money Control.

By May 17th, 2019 AT 2:50 PM
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As a means to save the debt-ridden national carrier Air India, the Government offered to offload 76% of equity share, according to a report by Money Control. The article that quotes Aviation Secretary said that the government had provided financial support to the airline from time-to-time as it failed to attract any investors in the bidding process that completed on May 31.

Air India

The Government is also said to have offered the opportunity to transfer the management to private entities. In such cases, the private body that takes over Air India will have to bear its Rs, 24,000 crore debt or the airlines, along with its Rs.8000 crores of liabilities.

According to the Union Minister for Civil Aviation Suresh Prabhu, restructuring of business can save Air India from its current debt status. The airline faces legacy issues and has an unsustainable amount of debt. Also, the timing of Air India divestment was not right. Air India has an intrinsic strength and global footprint. The airline can become profitable if the debt can be trimmed. IBC says that if businesses have unsustainable debt, it has to be restructured. Similar should be the case with Air India, Union minister for Civil Aviation Suresh Prabhu said.

At Moneycontrol Wealth Creator Awards in Mumbai, Mr. Prabhu said that the time during which the Government decided to initiate the stake sale process of Air India was wrong. He added that Air India holds value despite its vast debts.

In the financial year 2016 – 2017, Air India reportedly met with a loss of Rs 47,145.62 crores. As a means to get rid of the debts, Air India has started selling its assets. Recently, it put 70 residential and commercial buildings for sale to raise Rs. 700-800 crores. The annual target for Air India’s asset monetisation program is Rs. 500 crores.

Ria is a lead news writer at Aviation Scoop. She writes from dawn to dusk, reads in the evenings, and draws at some ungodly hours. She loathes human interaction, and finds solace in the sweet, musky smell of old books, and rain. Find her on Twitter here - @rialakshman.

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