The Centre's proposal for strategic sale of Air India's profit-making ground-handling subsidiary AIATSL has come as a shocker within the national carrier amid reports of government working on ways to revive the fortunes of Air India.
Sources said while the government machinery prevented the sale of loss making ground handling arm AI-SATS that has an investment from Singapore, the plan is to see that the proceeds from the sale of AIATSL are used to pay-off part of Air India's debt that has a burden of more than Rs 50,000 crore including sale of non-core assets. AIATSL and AISATS are two ground-handling companies of Air India.
AISATS is a 50:50 joint venture between Air India Limited and SATS Limited from Singapore with operations since 2008 for international airports at Bengaluru, Delhi, Hyderabad, Mangalore and Trivandrum. While AISATS has an employee strength of 7000, AIATSL workforce is about 12000 managing over 70 domestic airports which includes handling international airliners in some of them.
"This is really strange. Our own company which has been making profits has been put on sale, while a company formed after an investment from Singapore (AI-SATS) has been left out in the strategic sale. It should been the other way round. The stakes of Air India from AI-SATS should have been divested to AIATSL which manages over 70 airports as compared to SATS only four," said a top official of the national carrier.
Sources in Air India said that ever since its inception in 2003, AIATSL has been registering growth and profits and in the last four years it has recorded profits of over Rs 100 crore each year and has shared Rs 300 crore with Air India. The national carrier has five subsidiaries and only AIATSL and Air India Express have been making profits. AIATSL is yet to receive a committed amount of Rs 1300 crore as promised in the Cabinet note when it was formed as a subsidiary of Air India.
The Alternative Mechanism on Air India disinvestment, headed by Finance Minister Arun Jaitley on Tuesday decided to proceed with strategic sale through divestment of 100 per cent ownership of AIATSL. The meeting was attended by Jaitley and Civil Aviation Minister Suresh Prabhu besides top civil aviation officials.
"The sale would happen after transferring AIATSL to a Special Purpose Vehicle (SPV), which has already been incorporated. The EoI document would be issued after transfer of AIATSL to the SPV," officials said.
The latest strategic sale plan follows the decision by the ministerial panel in June to make Air India competitive, by way of cutting down debt and raising resources by selling land assets and other subsidiaries.
The ministerial grouping had decided to revive Air India after the government's strategic stake sale offer failed to attract any bidders earlier this year. The government had originally proposed to offload 76 per cent stake in the national carrier as well as transfer the management control to private players.