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Is privatization the last way to get Air India out of debt?

Tuesday - October 22, 2019 4:14 pm , Category : BUSINESS
Soon 100 per cent stake of Air India to be sold
Soon 100 per cent stake of Air India to be sold

Know why Air India going to become private?

OCT 22 (WTN) - After all, now the government aviation company Air India is going to be private. We are saying this because the Central Government is planning a bid to sell 100 per cent stake in Air India next month. According to information from sources, some companies have expressed their desire to buy Air India. For your information, let us know that there is a debt of about Rs 58,000 crore on Air India. Not only this, but the company has also incurred losses of thousands of crores of rupees.

By the way, it is being said that the sale of a loss-making Air India for years is now a profitable deal for the Central Government. It is true that Air India is running at a loss, but some companies have shown interest in buying 100 per cent stake in Air India. These companies are working on finalizing it before submitting their expression of interest.

According to sources, to buy 100 per cent stake in Air India, these companies will also submit an expression of interest at the end of this month or till next month. For your information, let us know that the bidding process will be through a newly developed e-bidding system to sell to Air India, a government sector airline.

Naturally, the privatization of Air India is being opposed by the employees and officials of Air India, so earlier this month the management of Air India held a meeting with the trade union regarding the proposed privatization. For your information, let us know that the privatization of Air India was opposed by most of the unions because they are afraid that if the privatization of Air India was done, many could lose their jobs.

With the objective of clearing the balance sheet of a loss-making Air India, preparations are underway to repay about Rs 30,000 crore through special purpose vehicle Air India Asset Holding Limited with the help of an insurance bond. For information, let us know that Air India Asset Holding Limited was set up for warehousing of working capital loans of four subsidiaries for which no assets have been kept.

The names of these subsidiaries are; Air India Transport Services Limited, Airline Allied Services Limited, Air India Engineering Services Limited and Hotel Corporation of India Limited. For your information, let us know that the company has raised Rs 21,985 crore since September 16 through a bond issue so that it can be used to reduce the debt burden on Air India.

That is it is clear that Air India could not compete with the private sector airlines. The government is hopeful that after selling 100 per cent stake of Air India in the private sector, the company will undergo considerable improvement and the company will once again make profits. By the way, the privatization of Air India will be a historical event in itself.

It will not be an easy task to make this company a profitable company once again which has a loan of Rs 58,000 crore. Naturally, after privatization, many officers and employees may have to lose their jobs, but there is no other way to protect the company other than privatization.