Govt to sell stake in Air India subsidiary Alliance Air as well: report
11 October 2021
State-run regional carrier, Alliance Air, which was hived off from Air India after the government decided to sell the latter, will also be sold as part of the government’s divestment drive. Alliance Air, which is part of the Air India Asset Holdings Pvt Ltd (AIAHL), will also be monetised and the funds utilised to pay off debt, according to a report in The Economic Times.
Alliance Air, along with the ground handling unit and engineering subsidiaries of Air India are expected to fetch Rs2,000 crore and sale of buildings and other assets an additional Rs14,700 crore.
Alliance Air has a fleet of 19 ATR aircraft that connect 48 locations. The regional carrier reported an operating profit of Rs65.09 crore and a net loss of Rs201 crore in FY20.
While the government announced the sale of 100 per cent stake in national flag carrier Air India and budget airline Air India Express as well as 50 per cent stake in ground-handling subsidiary AISATS, Alliance Air was kept out of the transaction.
The total debt on Air India had an accumulated debt of Rs61,562 crore in its books as of 31 August 2021, of which Rs15,300 crore was acquired by Tatas and the remaining Rs46,262 crore will be transferred to AIAHL, a special purpose vehicle (SPV), which houses Air India’s assets and liabilities. These assets include office space, including Air India building in Mumbai, and transport and engineering subsidiaries as well as Alliance Air.
Alliance Air has a major share of regional connectivity scheme Udan and is likely to evince interest from regional carriers. Out of two subsidiaries, ground unit is profit-making while the engineering subsidiary is a loss-making entity.
Alliance Air recently forayed into international flights by starting operations to connect Sri Lanka. The airline functions on various non-profitable routes in the North East that are subsided by the government through various incentives. It’s not clear whether these incentives will continue after the sale, the report added.