“The net worth would have dropped further (if sale was deferred). With the industry only expected to recover in 2023-24 and the number of uncertainties, the government needed to factor in the cost of supporting Air India, which was a minimum Rs 20 crore a day. Besides, there would have been further asset depreciation and asset obsolescence,” said Tuhin Kanta Pandey, secretary in the department of investment and public asset management (Dipam).
Pandey, who oversaw the sale, said that this was the best deal that the government could get given the massive loans and losses of the beleaguered airline. He said that safety valves have been built into the transaction to ensure that the interests of the Tatas are protected in terms of further addition to liabilities.
Besides, the terms provide for Air India to hand over a certain number of planes in fully operational condition. For instance, 58 of A-320 aircraft have to be fully air worthy. While the new owners will have access to three buildings owned by the airline for two years, apartments allotted to employees will have to be vacated within six months as non-core assets such as real estate, including the iconic Air India building at Mumbai’s Nariman Point, are not part of the deal.
Pandey also said that in future, the Centre will end the mandate for government officers to fly the national carrier, while adding that the sale will not impact the operations of Air India One, which flies the President and the Prime Minister, as the Indian Air Force has started running them. It is now called India One. And, when it comes to running rescue flights, such as Vande Bharat, the cost of operations were in any case reimbursed to the airline.