Govt to take over Air India’s unpaid bills of ₹16,000 crore

Govt to take over Air India’s unpaid bills of ₹16,000 crore

Sidhartha & Surojit Gupta TNN

New Delhi:11.10.2021

The new holding company for Air India floated by the government, which will take over its non-core assets, will also be saddled with a heap of unpaid bills from the bleeding national carrier, besides bank loans.

These “excess liabilities” being transferred to Air India Asset Holding Company Ltd add up to ₹15,834 crore — more than a quarter of the airline’s total debt, pegged at ₹61,562 crore in end-August.

What are these “excess liabilities”? Government sources said these are largely dues of oil companies, airport operators and vendors that AI managed to avoid over the years, being a wholly-owned government company. The government too has some part in this as it often delays payments, including for tickets purchased for its employees through another public sector company, Balmer Lawrie. “The sale will not just stop the hit that the government has to take on a daily basis but also help clean up the system and release funds,” a government official told TOI.

Liabilities to be taken over by new entity immediately

While the liabilities, including loans and unpaid bills, will be taken over by the new entity immediately, it will only be able to monetise the assets over the next few years, depending on the market condition. In the interim, it will have to work out arrangements with banks and other creditors to rework the terms, which the government believes should not be an issue as the government has guaranteed 94% of the loans used to keep the airline afloat, against accumulated losses of nearly Rs 84,000 crore at the end of March. Besides, the terms of the transaction provide for the government to bear the financial impact of AI operations until the company is transferred to its new owner by the end of December, officials said. Looked at another way, these excess liabilities are more than the book value of non-core assets of Rs 14,718 crore that have been transferred to the new entity and 35% of the total liabilities of Rs 44,679 crore that the new entity will have after factoring in the Rs 18,000 crore of debt and cash from TataSons and the non-core assets.