The Indian government is still on roads to sell debt-laden state-run carrier Air India.
Government is in favor of strategic disinvestment of Air India and its subsidiaries.
- Directors of Air India have decided to sell the airline’s properties across the country to make the airline financially attractive before starting a new divestment process.
- Also, it is decided that there will be transferring of non-operational assets to the government-approved special purpose vehicle (SPV).
- Air India seeks to sell its real estate assets to raise funds after a failed attempt in 2018 by the government to privatize the loss-making carrier.
- The privatization is on hold because of high oil prices and volatile exchange rates and rising interest rates which can hurt sale’s prospects.
In April, Air India managed to sell less than 10 of the 56 properties—mostly residential units in cities such as Mumbai, Delhi, Pune, Bengaluru, Chennai, and Kolkata—that it had put up for sale.
Government and its strategies to revive Air India
Government is planning to impose strict riders on fresh investments in Air India to make the airline financially attractive before starting a new divestment process.
The government has also transferred ₹29,464 crore of ₹50,000 crore debt of Air India to the SPV, which will be paid off by monetizing assets under the SPV, including land.
What are the expert’s opinion?
According to a real estate expert, Airline may face difficulty in finding buyers for the assets at the existing reserve prices, especially in bigger cities, given the current slowdown in the property market.
As some of the reserve prices of the properties are higher than their market price.
Now the only solution for the airline is to consider lowering reserve prices of certain properties to expedite their sale.