In a bid to recover from the losses and debts taken for Air India to function, India had come forward to call on potential investors.
A Finance Ministry official, Tuhin Kanta Pandey said in an interview that the state-owned carrier has decided to loosen the knot of the deal and make it eye-grabbing for the suitors. As such, the government will now be letting investors choose the amount of debt that they are willing to pay off that comes merged with the Air India deal.
The Disinvestment Secretary further said the bidding date for the airlines will probably be postponed. This is being done to give sufficient time to the suitors for making an offer.
“We will remove the constraints that the current structure of the transaction poses for investors. We are now thinking of letting the market determine the level of debt. That means we don’t freeze it,” said Mr. Pandey.
According to the present conditions of the deal, the investors will also need to take along the debt of the loss-making company- $3.3 billion. The drawback had deterred potential bidders from making a move.
The carrier had started loading losses after joining hands with Indian Airlines Ltd. Situations were such that it had to depend solely on the taxpayers’ money to continue working.
The Disinvestment Secretary said, “It is very difficult for the government to keep on sustaining Air India. Winding up could be disastrous. The only course now is to proceed towards disinvestment.”
Air India had set its asset target sale for this year at $28.6 billion. However, the pandemic had other plans that allowed the company to earn a meager 5% of the target set.
Economists estimate that this downfall will reflect in the GDP, hitting its all-time lowest.
The government plans now are to restructure its strategy and not raise money through exchange-traded funds, along with the avoidance of repeated offer-for-sale of the same products, encouragement of buyback items, and attain a good offer for the sale of state-owned business houses like Bharat Petroleum Corp.
Speaking about further courses of action due to the unseen pandemic, Mr. Pandey said, “Budget has no meaning in a Covid-19 situation. We will not get into the budget target. What we are saying is what’s possible post coronavirus.”
As the asset sale won’t be achieved this year, it is said that the company isn’t fetching ways to adopt a mechanism to sell them and rather bringing up methodologies to do the most of what is available during these times and post the phase of the pandemic as well.
