Operationalisation of Air India Engineering Services Limited (AIESL) and Air India Air Transport Services Limited (AIATSL) as New Subsidiary Companies of Air India

The Civil Aviation Minister Shri Ajit Singh announced that the Government today approved the proposal to hive off Maintenance, Repair & Overhaul (MRO) business of Air India Engineering Services Limited to tap the potential of nearly US$ 1.5 billion MRO business in the Asia Pacific Region. The Turn Around Plan (TAP) & Financial Restructuring Plan (FRP) for Air India has supported the move to hive off the MRO business from Air India and develop it as an independent business and profit centre. 

Justice Dharmadhikari Committee has also recommended this measure. Air India will provide the required equity for capital expenditure to the extent of Rs. 375 crores over a period of 3 years. This would be based on equity support received by it from Government of India as part of its FRP. The company is projected to be a profit making company from financial year 2017-18. About 7,000 employees of Air India will migrate to this new subsidiary company. 

The Minister also informed that the Government has decided to operationalise Air India Transport Services Limited as a new subsidiary of Air India to hive off Ground Handling (GH) business of Air India in order to develop it as a separate profit centre. This would be ensured by inculcating the improved quality services benchmarked to global standards, new work culture with customer focus, quick response to customer requirements, reduction in overhead costs, improved productivity on a low cost plateform, accountability for growth and profits etc. This hiving off has been recommended in the TAP & FRP of Air India supported by Justice Dharmadhikari Committee. 

Air India will provide the required equity for capital expenditure to the extent of Rs. 393 crores over a span of 12 years. This would be based on equity support received by it from Government of India as part of its FRP. 

This new subsidiary is projected to make profit from current financial year itself. 

Government Approves Financial Restructuring and Turn Around Plan of Air India National Carrier to get an Upfront Equity Suuport of Ruppees 6750 Crores

The Civil Aviation Minister Shri Ajit Singh announced that the Government today approved the Turn Around Plan (TAP) and Financial Restructuring Plan (FRP) for Air India.The Minister informed in a Press Conference that the Cabinet Committee on Economic Affairs (CCEA) has taken up the issues relating to TAP and FRP of Air India today and decided to approve them. 

Shri Singh further informed that the approval of the TAP and FRP by the CCEA would help Air India in getting (i) upfront equity support of Rs.6,750 Crore, (ii) GOI Guarantee for repayment of Principal amount and payment of Interest on the Non-Convertible Debentures of Rs. 7400 crore proposed to be issued to financial institutions, Banks, LIC, EPFO etc. and used to repay part of Working capital loans, (iii) equity for Cash deficit support of Rs.4,552 crore till FY 2021, (iv) equity for already guaranteed aircraft loan of Rs.18,929 Crore till FY 2021, (v) Induction of already contracted for aircraft which include 27 B 787 and 3X B777-300ER on a sale and lease back basis. 

The Minister also informed that the banks have also approved conversion of short-term/working capital loan of Rs. 11,000 crores into long-term loan. 

TAP and FRP had been prepared by the management of Air India in consultation with SBI Caps and vetted by an independent consultant M/s Deloitte. The FRP and TAP were also examined by a Group of Officers constituted by the Group of Ministers (GOM) on Civil Aviation. The GOM had recommended the TAP and FRP for approval of CCEA

The releases of various tranches of equity, however, would be subject to achievement of various laid down milestones that includes Pay Load Factor (PLF), On Time Performance (OTP), Fleet utilisation, Yield Factor, rationalisation of various emolument structure of the employees etc, The Minister added. An Oversight Committee shall be constituted to monitor and ensure that the milestones are achieved before the release of tranches.