Lok Sabha Question No. 380 (UNSTARRED), answered on 2018-07-19
Subject: Disinvestment of Air India
Ministry: CIVIL AVIATION
Asked by: BHARTRUHARI MAHTAB, RAJAN BABURAO  VICHARE, SURESH KODIKUNNIL, MUTHAMSETTI SRINIVASA RAO (AVNTHI), KURUPPASSERY VARKEY THOMAS, E. T. MOHAMMED BASHEER, ANTO  ANTONY, Gurjeet Singh,Aujla, RAHUL RAMESH SHEWALE, SANJAY SHAMRAO DHOTRE, JAYADEV GALLA, VASANTHI M., B.V. NAYAK, SUKENDER REDDY GUTHA, KUNWAR PUSHPENDRA SINGH CHANDEL

## GOVERNMENT OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA UNSTARRED QUESTION NO. : 380

I9th

July 2018)

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be pleased to state:-

- (a) whether the Government has found no bidder for its stake sale in Air India in the recent past;
- (c) whether the Government has formulated any plan to Air India out of its debt during each of the last three years; get
- (b) if so, the details thereof and the reasons therefor along with the present debt burden of Air India;
- (d) if s0, the details and its success thereof;
- (f) the steps taken/being taken by the Government to protect the rights of the
- (e) the number of suggestions/requests received by the Government for not selling its stake in Air India from various Experts/Unions in the recent past along with the present status of such suggestions/requests; and
- employees of Air India before announcing its stake sale in it?

## ANSWER

Minister of State in the Ministry of CIVIL AVIATION

380.

SHRI BHARTRUHARI MAHTAB

SHRI RAJAN VICHARE

SHRI KODIKUNNIL SURESH

SHRI MUTHAMSETTI SRINIVASA RAO (AVANTHI)

PROF KV. THOMAS

SHRI ET: MOHAMMED BASHEER

SHRI ANTO ANTONY

SHRI GURJEET SINGH AUJLA

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SHRI RAHUL SHEWALE

SHRI SANJAY DHOTRE

'

SHRI JAYADEV GALLA

SHRIMATI VASANTHI M

SHRI BV. NAIK

SHRI GUTHA SUKENDER REDDY

SHRI KUNWAR PUSHPENDRA SINGH CHANDEL

Will the Minister of CIVIL AVIATION

(Shri Jayant Sinha)

- (a) (b): The Preliminary Information Memorandum (PIM) for inviting Expression 0f Interest (EOI) for the Strategic Disinvestment of Air India including its shareholding in Air India Express and AI SATS was issued on 28th March, 2018. No Eol/ bid was received tili the last date 0f receipt of bids. Probable reasons as analyzed by the Transaction Advisor ie Mls EY for non-receipt Of bids, interalia, are GOI 24% stake and corresponding rights; high amount 0f allocated debt; changes in macro environment; individuals not allowed to bid, profitability track record; and bidders not able to form a consortium within time period: . being being given

As regards the\_present debt burden; the total outstanding loans on Air India at the end 0f 31st March 2017, as per the Audited Accounts of FY 2016-17 are Rs 48447.37 crores; the details are as under:

- Aircraft Loans Rs 17,359.61 crores
- b) Working Capital Loans Rs 31,087.76 crores

Total

Rs 48,447.37 crores

The TAPIFRP includes budgetary support amounting to Rs 30231 crores spread over 10 years i.e. upto FY 2020-21 and also equity support for the payment of principallinterest of the Non Convertible Debentures AiZ has received an Equity Infusion of Rs 27195.21 crores till FY 2018.

(c) and (d): In view of precarious financial health of Air India Ltd and to take AIL back on the of profitability: the Government has already approved and implemented a Turnaround Plan (TAP) for Air India Ltd in 2012 in terms of which all Government Guaranteed Aircraft Loans and interest thereon are by the Government by way %f Equity Infusion into Air India. Similarly; a Financial Restructuring Plan (FRP) has also been implemented by means of which high cost working capital loans have been converted into long term debt carrying lesser rates of interest so as to reduce the financial burden on AIL. path being paid

As a part ef the Turnaround strategy for Air India Ltd, Air India with the overall support of the Govt has initiated a number 0f in order to cut costs and losses. These steps, inter-alia, include the following: steps

- (ii)   Induction of brand new aircraft on several domestic & international routes to increase passenger appeal
- (1) Setting up a Route Rationalization Committee to ensure revenue maximization by continuously looking at load factors; revenue yields and competitor fare structure and responding immediately to the same
- (iii)  Phasing out & grounding of old fleet
- Cv) Introduction of PSS (Passenger Services System) to have & single code and SAP ERP based Solutions
- (iv) Leveraging the assets of the Company to increase MRO revenue and revenue from Company' s real estate properties
- (vi) Establishment of Integrated Operations Control Centre and Hub Control Centre in Delhi
- (viii) Induction of the B-787 aircraft on Medium Capacity/Long Haul Routes.
- (vii)  Operationalization of Subsidiary Companies such as AIATSL & AIESL and transfer of manpower and equipment and treating them as Independent Profit Centers
- (ix) Restriction on staff 'overtime/holiday pay, except when operationally required
- (xi) Restriction on Foreign Travel
- (x) Encouraging of same return travel to avoid unnecessary hotel expenses\_ day duty
- (xii) Focus on cargo Revenue
- (xiv) Rationalising Commission of Agents
- (xiii) Focus on Ancillary Revenue
- (xv) Review of loss making routes:

(e): The Government has received various representations from employees unions of Air India and other persons/groups not selling the GOI stake in AI. As no bids have been received, any measurelstep required to be taken on this account does not arise at this stage: for

Air India has shown & considerable improvement both in terms 0f Operational and Financial Parameters in the recent past However, it may be noted that the main improvements have come around since 2011-12 i.e. since the implementation of the Turnaround Plan (TAPI(FRP) EBITDA has become positive since 2012-13 and continues to be positive even as compared to the negative EBITDA before the implementation of TAP: today

(f: No EoL/ bid was received till the last date of receipt of 'bids,so the steps required to be taken by the Government to protect the rights 0f the employees of Air India in this regard does not arise at this stage.

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