NEW DELHI: The new holding company for Air India, which will take over real estate, paintings and other non-core assets of Air India, will also be saddled with piles of unpaid bills from the hemorrhaging national carrier, in addition to loans from banks.
These “excess liabilities” being transferred to Air India Asset Holding Company Ltd add up to Rs 15,834 crore — which is more than a quarter of the airline’s total debt, pegged at Rs 61,562 crore at the end of August.
So what are these “excess liabilities”? Government sources said these are largely unpaid bills of oil companies, airport operators and other vendors that Air India had managed to avoid paying over the years by virtue of 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.
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 Air India operations until the company is transferred to its new owner by the end of December, officials said.