Total debt of Air India rises to nearly INR 43,000 crore

(Inputs from CNBC-TV 18)

The total debt of national carrier Air India has risen to around INR 43,000 crores, officials aware of the matter told CNBC-TV18.

As per the preliminary information memorandum, the total debt of Air India stood at INR 58,282.9 crore as of March 2019. However, the Cabinet had given post-facto approval in February 2019 for the creation of SPV namely Air India Assets Holding Ltd (AIAHL). They had decided to transfer the debt of Air India Ltd amounting to INR 29,464 crores to the SPV.

As of now, the total debt is around INR 43,000. This is after the transfer of INR 29, 464 crores to the SPV, a person aware of the matter said, adding that more than 90% of the total debt is government-guaranteed.

In Feb 2021, the civil aviation ministry had informed Rajya Sabha of the total debt of national carrier Air India as per provisional figures of 2019-20 (Apr-Mar) INR 38,366.39 crore after transfer of debt amounting to INR 22,064 crore to the SPV.

The total debt of national carrier Air India has risen to around INR 43,000 crores.

The divestment of the debt-laden national carrier is currently underway and the deadline for submission of financial bids ends on September 15.

In January 2020, the government had invited bids for strategic disinvestment of 100% stake of the Government of India in the airline. It also includes along 100% stake in Air India Express Ltd and a 50% stake in Air India SATS. Due to the COVID-19 pandemic, the last date for submission of preliminary bids was extended from time to time.

While multiple bids were received by the transaction advisor in the preliminary round, the outcome of the second round is expected to be known by next week.

“Air India has movable as well as immovable assets. With the disinvestment of Air India Limited, the movable assets are proposed to be transferred to the new owner of Air India. Immovable assets are being monetised by Air India to offset the debt of Air India Limited.The total Net Fixed Assets of Air India Ltd. as of 31.03.2020 (provisional) are INR 45,863.27 crore. These include land and buildings, aircraft fleet and engines, other fixed assets, Right of Use assets and assets and intangible assets. The enterprise value set for bidding has not been determined so far."Civil Aviation Ministry in Lok Sabha

The airline posted a net loss of INR 3836.78 crore in FY16, INR 6,452.89 crore in FY17, INR 5,348.18 crore in FY18, INR 8,556.35 crore in FY19 and INR 7,982.83 crore in FY20 as per provisional figures.

While there was no equity infusion by the union government into Air India during FY 2020-21, government Guarantee support of INR 964 crore has been provided to Air India which has helped it to raise new working capital loans from Indian banks. Further, Government has also extended the existing Guarantee of INR 6693 crore for working capital requirements and $819 million for refinancing of aircraft bridge loans. National Small Saving Fund (NSSF) loan of INR 4500 crore has also been provided to Air India in FY 2020-21.

Under the turnaround plan approved for Air India, the airline has received a total equity infusion of INR 30,520.21 crore from FY 2011-12 till Dec 2019, the civil aviation ministry had informed Lok Sabha in 2019.

Out of this, during FY 2019-20, FY 2018-19 and FY 2017-18, the equity infusion provided by the government to Air India Ltd was INR 0.01 crore, INR 3975 crore and INR 1800 crore respectively.

September 11, 2001 - The day etched in history as one of the worst terror attacks in aviation, sending ripples across the globe. The Islamic Extremist group, Al-Qaeda, took the responsibility for the four coordinated terror attacks in the US. The highly-trained terrorists hijacked 4 commercial aircraft and flew two of them into the "Twin Towers" of the World Trade Center in New York.

Wikimedia Commons

American Airlines Flight 11 crashed into floors 93 to 99 of the North Tower (1 WTC) while an United Airlines Flight 175 struck floors 77 to 85 of the South Tower (2 WTC) just minutes later. First responders immediately sprung into action to rescue those still trapped.

American Airlines flight 77 dove straight for the "symbol of the American military power"- The Pentagon and crashed.

United Airlines flight 93 crashed in a field near Shanksville in Somerset County of Pennsylvania and was suspected of having headed towards the Capitol Building.

An immediate aftermath after the tragedy, in addition to the massive loss of life and property, was the closure of US airspace.

The two-day US airspace closure led the operating revenue of airlines globally to drop to $307.5 billion in 2001 and $306 billion in 2002 from $328.5 billion in 2000IATA

The revenue continued to fall throughout the 5 year period until 2005 when it slowly began to catch up.

How it impacted aviation in India

The events that unfolded on that unfortunate Tuesday morning 20 years ago, had ripple effects on aviation throughout.

In August 2001, at a time before the merger of Air India and Indian Airlines, an official trip was made to Llyod's London, by representatives from both the entities to discuss and extend the insurance cover of Indian Airlines’ entire fleet.

Indian Airlines

Air India

The new insurance cover (for IA) was to come into effect from October 2001. Globally, no airline can fly its fleet unless it has an insurance cover. The team had to travel to London to meet with Lloyd’s as they are the underwriters for renewing the entire global fleet of civilian aircraft owned by various airlines. The insurance cover was obtained and there was relief all around that Indian Airlines would be able to continue flying its planes.V Subramanian, the then joint secretary and financial advisor in the Ministry of Civil Aviation

Unfortunately, fate had other plans. When the Indian team reached back, the fateful news of the hijack break-out and that could only mean one thing. The US and the insurers rolled back on the agreement and canceled all insurance contracts.

All aviation insurers issued a seven-day notice of cancellation of the air transport industry’s third-party war risk insuranceIATA said in a statement on September 17,2001

When we heard about the September 17 notification, we went into crisis mode, held innumerable discussions, and decided to get back to the insurers. It was also decided that the Indian side should be represented at a higher level and be capable of deciding on the spot instead of going through the process of seeking further approvals.-V Subramanian

Not willing to give up, Mr. Sunil Arora, the then chairman and managing director of Indian Airlines, Mr. Beri, the chairman and managing director of New India Insurance, and Mr. Subramanian approached the Llyod's team in London again, only to successfully reinstate the insurance terms once again.

Reportedly, the deal came through after two visits to London but this time, at increased premium rates due to the aftermath of the Twin Tower incident. Although this was true, a small price to pay to keep Indian Airlines flying.

This occurred at a time when Indian Airlines was the only major domestic operator in the country. Air India did operate domestic flights although they were essentially an extension of the flights originating from aboard.

COVER: AP

The forecourt of the Delhi airport was waterlogged for a "short period" on Saturday, September 11 morning due to sudden heavy rains, its operator DIAL said. Sources said five flights were diverted from the airport this morning due to the bad weather conditions.

Four domestic flights -- two of SpiceJet and one each of IndiGo and Go First -- were diverted to Jaipur. One international flight -- Emirates flight from Dubai to Delhi -- was diverted to Ahmedabad, the sources mentioned.

https://twitter.com/DelhiAirport/status/1436583124524175363

Waterlogging has been reported from several parts of the national capital including Moti Bagh and RK Puram in south Delhi after rains lashed the city Saturday morning. The Delhi International Airport Limited (DIAL) said on Twitter that "due to sudden heavy rain, for a short period, there was waterlogging at the forecourt".

https://twitter.com/SanjayJha/status/1436590714297589763

Credit - Sanjay Jha

"Our team was immediately aligned to look into it and the issue has been resolved," it added. An official of the meteorological department said the national capital received 97 mm rainfall since Friday morning.

The recent update from the Delhi Airport is that the water is being drained the operations are back to normal.

https://twitter.com/DelhiAirport/status/1436597881683668996

India’s largest airline, IndiGo, is expecting to run at full capacity on the domestic routes, a sign of recovery in aviation from the clutches of the pandemic as the number of cases come down in the country.

Speaking to Bloomberg Television, IndiGo CEO Ronojoy Dutta said that “things are improving slowly’’ and that it was not “hard to be bullish as traffic is going up’’.

He said the load factor at present for the airline is 70% and that it is targeting just over two-thirds capacity in the international market.

His comments come after parent InterGlobe Aviation reported a net loss of INR 3,174 crore for the three months ended June 30, 2021, with the second wave of Covid-19 adversely impacting its performance. Losses in the corresponding quarter a year ago were lower at INR 2,844 crore. During the January-March quarter, the airline had operated at 75% of pre-Covid capacity, which dipped to 44% in April-June 2021.

IndiGo's CEO Ronojoy Dutta said that “things are improving slowly’’ and that it was not “hard to be bullish as traffic is going up’’.

In a conference call with analysts in July, Dutta had said the main aim was to add capacity to get back to pre-Covid levels as quickly as possible.

During the second quarter, the airline like the others was restricted to 65% capacity deployment and it provided scheduled services to 66 domestic destinations. The capacity limit was raised to 75.2% from August 12.

When the pandemic struck last year, the Centre had lowered capacity to just 33% of the pre-Covid level on domestic routes, which was raised to 80% in January 2021.

The second wave led to fresh restrictions: capacity was reduced to 50% from June, which was raised to 65% in July and then 75% in August.

During the January-March quarter, the airline had operated at 75% of pre-Covid capacity, which dipped to 44% in April-June 2021.

The ban on international flights remains and has been extended till the end of this month. Bilateral flights with select countries such as the US and UK under the air bubble arrangement are operational since July 2020.

Dutta’s comments also come at a time of a pick-up in domestic traffic. A recent report from credit rating agency ICRA said passenger traffic rose 31% to 66 lakh from 51 lakh in the previous month, helped by higher capacity deployment and a downward trend in the pandemic. On a year-on-year basis, the domestic passenger traffic shot up around 131% to over 28.3 lakh in August.

The rating agency said capacity deployment in August was up 99% to 57,500 departures against 28,834 departures a year ago while on a sequential basis, it was higher by around 22%.

IndiGo in May considered selling shares worth 30 billion rupees to large investors even though it had laid the plan aside in January deeming the internal sources of cash sufficient.

However, there is continued stress on demand despite a recovery in August, driven by the second wave of the pandemic that has limited travel to only for necessary purposes. Observers said it remains to be seen if the Centre further relaxes the capacity deployment on domestic routes given the concerns of a third wave.

The carrier had also made leaves-without-pay compulsory for all employees as the passenger traffic dipped to near zero numbers during the second wave between March and May.

Indian carriers have resorted to raising funds to do away with the cash crunch. IndiGo in May considered selling shares worth 30 billion rupees to large investors even though it had laid the plan aside in January deeming the internal sources of cash sufficient.

Cochin International Airport Limited and Air India Express Limited signed an MoU for exploring and implementing a slew of promotional campaigns, programmes and schemes for passengers. As part of the MoU, both the companies are launching an all-new promotional scheme for the passengers.

The passengers travelling on Air India Express (AIE) can avail of 15 to 20% off while shopping from the Cochin Duty-Free shop at the international departure terminal. In addition, passengers travelling on any airline will stand a chance to win free round-trip tickets through a lucky draw if they are purchasing from Cochin Duty-Free.

The passengers travelling on Air India Express (AIE) can avail of 15 to 20% off while shopping from the Cochin Duty-Free shop at the international departure terminal.

The MoU was signed by CIAL Managing Director S Suhas IAS and Chief Executive Officer of Air India Express Aloke Singh at an event held in Kochi. As part of the agreement, both the companies are launching an all-new promotional scheme for the passengers.

Significant milestone

"The signing of the MoU sets a significant milestone for closer collaboration and long-term association between CIAL and Air India Express Limited. Partnerships between institutions are built on shared values. Air India Express identifies CIAL as one of its primary hubs. Air India Express is the single largest international airline operator from CIAL in terms of the number of flights."S. Suhas, Managing Director, Cochin International Airport Limited (CIAL)

"With the MoU, AIE is looking forward to engaging with its customers more. Being the largest international airline operating in Kerala, Air India Express is looking forward to leveraging the tremendous tourism potential offered by the State once the situation comes back to normal. Initiatives like this collaboration with Cochin Duty-Free will help us become more involved with our customers.”Aloke Singh, CEO, Air India Express

Air India is set to commence its first-ever non-stop service between Hyderabad and London, with the first flight arriving here from the UK capital on Thursday, September 9.

The same flight will depart to London on September 10 strengthening the connectivity on the India-UK sector, a press release from the carrier said.

The flight will operate twice a week with a Boeing 787 Dreamliner aircraft with a capacity of 256 seats, including 18 in Business Class and 238 in Economy Class configuration.

The flight will operate twice a week with a Boeing 787 Dreamliner aircraft.

The flight from Hyderabad to London will operate twice a week on Mondays and Fridays.

The total flight time on this route will be 10 hours and 30 minutes from Hyderabad to London and 9 hours 20 minutes from London to Hyderabad, depending on the wind speed and other conditions on that particular day, the release said.

At present, Air India operates non-stop flights to London from Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Amritsar, Kochi, Ahmedabad and Goa.

Air India had resumed its weekly direct flight to London’s Heathrow airport from Amritsar on August 16, this year. On Wednesday, September 8, the national carrier commenced direct flight between Amritsar and Rome.

At present, Air India operates non-stop flights to London from Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Amritsar, Kochi, Ahmedabad and Goa.

Last week, Air India resumed its Amritsar-Birmingham direct flight under the Vande Bharat Mission. Air India also resumed bookings on international flights from India to Saudi Arabia.

Air India has been playing a major role in the Government's epic 'Vande Bharat Mission' and Air Transport Bubble Arrangement to fly people, left stranded due to the air route restrictions, back home. So far, Air India has flown over 40 lakh people and, the mission continues, it added.