Central decides to bid adieu to Alliance Air, looking to clear debt off Air India SPV

Just last month, the Tata Group made a historic move and took over Air India, the loss making airline, including 100% equity of its low cost subsidiary Air India Express & 50% equity of Air India SATS. Not part of the deal, Alliance Air, is now being considered for sale by the Central government – who has decided to bid adieu to the groundhandling arm of Air India starting 1st April. According to sources, the sale has been given a go ahead and an Expression of Interest (EOI) will soon be issued.

We already have Cabinet approval for selling the subsidiaries of Air India. So we will come out with an EOI inviting bids for one of the groundhandling arms in the next fiscal,” the official said without specifically naming the company.

Air India Assets Holding Pvt. Ltd. was established in 2019 as Air India’s Special Purpose Vehicle (SPV) with the aim to hold its subsidiaries as well as most of its debt. There are, at present, 4 Air India subsidiaries under the SPV, namely: Air India Air Transport Services Ltd.; Airline Allied Services Ltd.,  Alliance Air; Air India Engineering Services Ltd.; and the Hotel Corporation of India Ltd.. Out of these, Tata Group did not take over Air India Transport Services and Alliance Air.

All four subsidiaries of Air India are expected to sell for INR 20 billion (USD 265 million), along with INR 147 billion (USD 1.95 billion) extra from the sale of buildings & other assets. Central plans to divert the amount from the sale of Alliance Air towards settlement of partial debt held in the SPV.

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