Govt starts works on sale of 4 Air India subsidiaries it retained

Ground-handling arm would be monetised first; investor roadshows for all companies organised

The government has started on selling four Air India subsidiaries that it retained after selling the airline to the Tata group in October last year.

The Department of Investment and Public Asset Management (DIPAM) has started preparing the expression of interest (EoI) and preliminary information memorandum for the sale of Air India Airport Services Ltd (AIASL) and Air India Engineering Services Ltd (AIESL). The process to sell two other subsidiaries, Alliance Air and Hotel Corporation of India Ltd (HCI), would start soon, said a government official.

The government plans to first monetise AIASL, the airline’s ground-handling arm. All the companies are housed under Air India Assets Holding Ltd (AIAHL), a special purpose vehicle set up in 2019 for holding the airline’s non-core assets and debt. While selling Air India to the Tatas, the centre, through AIAHL, had paid off the airline’s debt of about Rs 46,000 crore. It settled about Rs 15,000 crore of excess liabilities that included unpaid fuel bills and payment to other operational creditors.

Road shows for the subsidiaries evinced good interest among investors whose feedback will be used to structure the sale, said another government official.

AIASL’s annual report said the airport services company handled 51,774 Air India and subsidiary flights in Financial Year 2020-21 (FY21), as against 1,33,668 flights in FY20. It also handled 26,579 flights of scheduled and non-scheduled customers in FY21, compared with 25,020 flights in FY20. AIASL’s revenue halved in FY21 due to Covid-19, leading to a loss of Rs 203 crore. It had reported a revenue of 696 crore, and a net profit of Rs 50 crore in FY20.

AIESL reported a drop in revenue to Rs 1185 crore in FY21 from Rs 1427 crore in FY20, and saw its net profit decline to Rs 12 crore in FY21 from Rs 24 crore profit reported a year ago.

Alliance Air had reported a net loss of Rs 360 crore in FY21 as compared to a net loss of Rs 235 crore in FY20. Hotel Corporation of India’s revenue declined 63 per cent year on year to Rs 24 crore in FY21 from Rs 68 crore reported a year ago. This led to a 75 per cent increase in its net loss to Rs 97 crore in FY21 from Rs 55 crore loss reported a year ago.