Government to float RFP for merchant bankers over Air India disinvestment
The government will soon float a request for proposal (RFP) for selection of transaction advisor, legal advisor as well as asset valuer for the proposed disinvestment of national carrier Air India. The Cabinet Committee on Economic Affairs (CCEA), the apex body for formulation of government’s economic policies, had on June 28 granted its in-principle approval for considering strategic disinvestment of Air India and five of its subsidiaries, which include Air India Express as well as engineering and ground handling units. “The announcement of RFP for appointment of a transaction advisor, a legal advisor and asset valuer is expected to be made soon for disinvestment of Air India,” an airline source said. Though the government has not yet set any timeline for disinvesting its stake in the loss-making flag carrier, the whole process is expected to be completed in 12 months to 18 months time. “The announcement of the RFP will set in motion the stake sale process,” the source said. A group of ministers, headed by Finance Minister Arun Jaitley, has been mandated to decide on the treatment of unsustainable debt of Air India, hiving off certain assets to a shell company, spinning off and selling stakes in three profit-making subsidiaries, the quantum of disinvestment, and the eligibility criteria for the bidders. Launched by JRD Tata as Tata Airlines in 1932, its name was changed to the Air India in 1946. The government decided to take it over in 1953. Air India, which has a debt burden of more than Rs 52,000 crore, is staying afloat on taxpayers money. The previous UPA government had extended bailout package worth little over Rs 30,000 crore to the national carrier for a ten-year period starting from 2012. Air India’s net loss after tax narrowed to Rs 3,643 crore and operating profit rose to Rs 300 crore in the last financial year, Minister of State for Civil Aviation Jayant Sinha had informed Parliament last month. The airline’s total debt stood at Rs 48,876.81 crore (provisional figures) at the end of March 2017 and the out go on account of servicing the debt stands at around Rs 6,000 crore. The employees’ unions at Air India are opposed to the privatisation of the two government-run entities. Air Corporation Employees Union (ACEU), which is a grouping of Air India’s non-technical staff and comprises nearly 8,000 of the total 21,137 employees, has termed the decision as ‘arbitrary’. Jahleel Addae Authentic Jersey
Air India seeks $740 million loan to finance purchase of 6 Boeing planes
Air India is looking for bridge loans worth up to $740 million to finance purchase of six Boeing 787-8 planes, according to a tender document. While the government is working on final contours for a strategic disinvestment of its stake in loss-making Air India, the airline is ready with plans to fly to more overseas destinations. The airline has sought offers from banks and financial institutions to arrange bridge financing of up to $740 million for the six aircraft. The amount translates into around $123.3 million per plane. At the current exchange rate, $740 million is around Rs 4,720 crore. “In addition to the Government of India guarantee, Air India will offer the aircraft as a security. The facility should be a direct loan without the requirement for formation of a special purpose vehicle structure which requires title transfer,” the tender document, floated last Friday, said. Air India has an agreement with Boeing Company for purchase of 27 B787-8 planes. Out of them, the airline has completed the sale and lease back for 21 aircraft. For three B787-8 planes — each of which was delivered in November 2016, January and July — Air India had arranged bridge financing without Indian government’s guarantee. Among the remaining three aircraft, two are scheduled to be delivered this month and one in October. According to the document, the government has indicated that it would issue guarantee for the six B787-8 aircraft, which includes three that have already been delivered. “Therefore, Air India would like to refinance the bridge loan for 22nd to 24th B787-8 aircraft and needs interim bridge financing for the remaining three B787-8 aircraft (25th to 27th) for 15 months at the time of delivery,” the document said. Air India has a fleet of 110 planes, including 33 Boeing aircraft. Air India, which has the largest international market share among domestic carriers, will soon be launching flights to Stockholm and Copenhagen. Last month, the airline started direct service between New Delhi and Washington, its fifth destination in the US. As part of efforts to revive Air India, the Cabinet has given its in-principle approval to stake sale in the airline — which is surviving on taxpayers’ money. Devan Dubnyk Womens Jersey
TAP makes substantial progress in financial turnaround of Air India
The Government of India had approved a Turnaround Plan (TAP) / Financial Restructuring Plan (FRP) for operational and financial turnaround of Air India. The TAP/FRP provides equity infusion of Rs.30,231 crores upto 2021 subject to achievement of certain milestones. Minister of State for Civil Aviation Jayant Sinha in a written reply to a question in the Rajya Sabha today said that Company has made substantial progress in both operational as well as financial areas as per TAP Milestones. As a part of the turnaround strategy, the company, with the overall support of the government, has initiated a number of steps in order to cut costs and losses. These steps, inter-alia, include the following: i. Route rationalization of erstwhile Air India (AI) & Indian Airlines (IA) route and elimination of route network involving parallel operations. ii. Rationalization of certain loss making routes. iii. Enhanced utilization of new fleet resulting in production of higher Available Seat Kilometers (ASKMs). Andre Smith Authentic Jersey
Three-pronged strategy cleared for Air India disinvestment
The Cabinet committee of economic affairs (CCEA) has finalised a three-pronged strategy for the disinvestment of Air India — demerger and strategic disinvestment of three profit making subsidiaries, hiving off of certain assets into a special purpose vehicle and treatment of unsustainable debts of the ailing carrier. The three profit-making subsidiaries are the low-cost airline Air India Express Ltd, the ground handling company Air India Air Transport Services Limited and Air India’s joint venture with SATS Limited for ground handling activities in Delhi, Mumbai, Trivandrum and Bengaluru. The process will be piloted by the Air India Specific Alternative Mechanism (AISAM) comprising finance minister Arun Jaitley, civil aviation minister Ashok Gajapathi Raju, transport minister Nitin Gadkari, Railways minister Suresh Prabhu and power minister Piyush Goyal. In addition to laying a roadmap to take care of the massive debt that Air India has incurred over the years, the assets that are to be incorporated in the ‘shell companies’, the committee will also decide on the quantum of disinvestment of the parent company and its subsidiaries and take decisions about the bidders. The decision was taken at a CCEA meeting on June 28. The Niti Aayog had submitted its recommendations on the strategic disinvestment of Air India and five of its subsidiaries on May 12, citing the carrier’s monthly losses to the tune of Rs 200-250 crore as the primary reason why such a move is required. Air India’s cash deficit is expected to double from Rs 1,050 crore in 2015-16 to Rs 2,069 crore in 2016-17, according to the provisional figures in a report submitted by the ministry of civil aviation to the standing committee on transport, tourism and culture. In a note the ministry has argued that since there are several Indian owned private airlines operating in the domestic and international sectors, there is no need for the government to be involved in the aviation business. Air India caters to 42 international destinations in 27 countries and 72 domestic stations with its subsidiaries. The airline has 142 aircraft including 15 wide-body B777s, 24 B787s and four B747 aircraft and 65 narrow-body A320s. Its subsidiary Air India Express has 23 B737-800 aircraft and Alliance Air has a fleet of 11 ATR 72 aircraft. Andy Lee Authentic Jersey
It Is In Government’s Interest To Protect Air India Jobs: Arun Jaitley
Finance Minister Arun Jaitley today said a “proper decision” would be taken on Air India’s future in a competitive market and that it would be in the government’s interest to protect jobs at the airline. His remarks come at a time when a group of ministers headed by him is working on the modalities for the divestment of loss-making Air India. In a competitive market, challenges are different and a “proper decision” would be taken on what Air India has to do in such a market, Jaitley said in the Lok Sabha. “Is mein karmchariyon ke services bachee rahen, is mein hamara bhi swarth hai (It will be in the interest of the government to protect the jobs at Air India),” he said while replying to a discussion on Supplementary Demands for Grants. Noting that the airline has a debt of Rs. 50,0000-55,000 crore which is “not small”, he said, “now we have to decide what has to be done with the Air India”. He also wondered for how long can tax collected from the public be given to the public sector airline. The previous UPA government had extended bailout package worth little over Rs. 30,000 crore to the national carrier for a 10-year period starting from 2012. Air India has a share of around 15-16 per cent in the domestic market while some 84-85 per cent passengers are flying in private airlines, Jaitley said. Nathan Shepherd Jersey
AAI land monetisation plan on hold
The Centre has put on hold a plan to amend the law to enable monetisation of land assets owned by the Airports Authority of India (AAI) announced in the Union Budget 2017-18 by Finance Minister Arun Jaitley. In his Budget speech, the Finance Minister had said that money raised through monetisation of land assets will be utilised for airport upgradation. The Centre had initiated a proposal for amending the Airports Authority of India (AAI) Act, 1994 for liberalising land use at airports owned by AAI as mentioned in the National Civil Aviation Policy (NCAP) 2016, Minister of State Civil Aviation Jayant Sinha said in a written reply in Rajya Sabha on Tuesday. However, the GMR-led Delhi International Airports Ltd. had challenged the provision in the NCAP 2016 in Delhi High Court which declared it as “ultra-vires.” “Thus, the proposal of amendment in the AAI Act has been kept in abeyance. Ministry of Civil Aviation has approached the Supreme Court against the decision of Delhi High Court and the matter is presently sub-judice,” Mr. Sinha added. William Jackson Authentic Jersey
Air India’s current business ‘not sustainable’: Government tells Parliamentary panel
Air India’s current business is “not sustainable” as it is neither able to generate enough cash flow nor start repaying even the principal amount on its debt, the government has told a Parliamentary panel. With the Cabinet giving “in-principle” approval for selling stake in the loss-making Air India, a ministerial panel is working on the final contours of the proposed disinvestment. Against this backdrop, a parliamentary panel has sought details on the Air India disinvestment decision. Sources said the civil aviation ministry has provided a brief overview about the factors that led to the decision to sell Air India stake to the panel. In the current scenario, Air India is not in a position to generate enough cash flow, to be in a position to start repaying principal amounts on its debt, the ministry has told the panel, according to sources. Doug Middleton Authentic Jersey
DGCA starts safety audit of country’s airlines
As an audit of India’s aviation sector by the International Civil Aviation Organisation (ICAO) nears, the local regulator has launched an evaluation of the country’s airlines for their compliance with safety standards. The Directorate General of Civil Aviation (DGCA) audit is seen as part of the local body’s preparation for the international audit, which comes in the backdrop of increased instances of safety violation in Indian skies. Adverse findings during the evaluation by ICAO, a UN watchdog, could result in foreign aviation regulators imposing sanctions on India. “The airline audit will check them (carriers) on almost all parameters,” said an official in the know, who did not want to be named. Airlines confirmed the development. “These audits by DGCA cannot be surprise audits and they need to inform us and seek dates for the audit,” said an executive at an airline. “Our audit is likely to happen in September.” The number of safety violations reported in Indian skies increased by more than half in 2016 compared with the previous year. According to DGCA data, it took 422 enforcement actions last year, compared with 275 in 2015. And, this at a time when India has become the fastest growing aviation market, registering more than 20% growth in passenger traffic and capacity in each of the past two years. After an audit in 2012, the UN watchdog had placed India on its list of 13 worst-performing nations in terms of air safety, triggering a downgrade of Indian aviation by the US Federal Aviation Authority two years later. The ratings were finally restored in 2015. Such downgrades could hamper Indian airlines’ services to foreign destinations as well as their ability to form codeshare tie-ups. ICAO wanted to conduct the audit in March this year, but agreed to a request from the aviation ministry that it do so later as March also marked the end of financial year in the country. It conducts audit in areas related to legislation, organisation, licensing, operation, airworthiness, accident investigation, air navigation and aerodromes. DGCA officials said the regulator was prepared for the international audit. “One of the concerns was of strengthening regional offices and stationing flight operations inspectors at regional offices. We have almost completed that and we have already placed people at regional offices in Mumbai and Bengaluru,” said a senior DGCA official, who also spoke on the condition of anonymity. The aviation regulator has every requirement in place and will comfortably clear the ICAO audit, he added. Manti Te’o Womens Jersey
India will need 2,100 aircraft in 20 years: Boeing
Boeing estimates that India will require 2,100 aircraft in next 20 years valued at $290 billion. Almost 85 per cent or 1,780 aircraft of 2,100 aircraft will be single aisle such as Boeing 737. Boeing officials said the latest forecast of 2,100 aircraft is the highest ever for India. Boeing was upbeat about the regional connectivity scheme. At a press conference on market outlook, Boeing said that if RCS works out it would be a beneficiary. Dinesh Keskar, Senior Vice President, Sales, Asia Pacific and India, Boeing, said the company was in talks with Air India Express for Boeing 737 MAX. Pierre Turgeon Womens Jersey
IndiGO to start using ATRs by year-end
IndiGo plans to start commercial operations with ATR 72-600 aircraft by the end of this calendar year, said the company’s President and Whole-time Director Aditya Ghosh at a conference call with financial analysts soon after the company declared its Q1 results here on Monday. “Documentation work with the aircraft and engine manufacturers continues towards finalisation of the purchase agreement (for acquiring the ATR aircraft),” Ghosh said. IndiGo had told the BSE in May that the airline had signed a term sheet with French-Italian aircraft maker ATR for purchase of 50 ATR 72-600s, with the flexibility of reducing the number of aircraft based on certain terms. A term sheet means that the airline has now identified the aircraft that it plans to buy. IndiGo currently only operates Airbus A-320 aircraft. Meanwhile, the airline said it continues to have operational issues with the Airbus A-320 New Engine Option (NEO), more popularly called the 320 NEO, due to engine issues. Ghosh said there have been days when the airline has had to “ground as many as nine NEOs due to lack of spare engines.” He added that the airline continues to have a high number of engine removals and sufficient spare engines are not available. “Based on what we know today, it may be another year or so before the design changes are implemented by Pratt and Whitney, which should allow these engines to have the on wing flight hours that we expect from them,” he said. Drew Kaser Womens Jersey