Oil marketing companies and banks may find themselves at a loss as the government tries to reduce Air India’s borrowings before putting up the debt-ridden national carrier for sale. The Civil Aviation Ministry and the Finance Ministry are in the process of meeting banks and oil companies to get haircuts for Air India’s debt, ET Now reported citing unnamed sources in the Civil Aviation Ministry.

According to the report, the two ministries are meeting banks to get haircuts for Air India’s debt and simultaneously are also holding meetings with oil companies to reduce Air India’s dues.

With a view to expanding international operations, Air India will add four Dreamliner aircraft to its fleet. Senior executives at the airline said it would use a $450 million bridge loan (Rs 2,900 crore) to part fund the purchase. The mandate for sourcing the loan has been given to Mashreque Bank and NABARD. The expansion of the Dreamliner fleet will help the airline operate on long haul routes.

Air India is planning to sell its properties and land parcels across the country. Civil aviation minister Ashok Gajapathi Raju met finance minister Arun Jaitley on Thursday to decide the process.

Sources privy to the discussions say the idea is to sell real estate assets in cities, airport locations, and airline offices at prime locations. A consultant will be appointed to make a detailed inventory report of the assets and fix a proper valuation for them. The entire process will be reviewed by a committee, which will comprise of secretary-level officials from the civil aviation ministry and finance ministry, people from Air India, and a retired judge.

Even as reports of the government looking to sell Air India gain ground, the national carrier is expected to report an operating profit of close to Rs 300 crore for FY17, up from Rs 105 crore in 2015-16. Senior executives told FE passenger revenues grew to Rs 16,200 crore last year. This will be only the second year since the merger with Indian Airlines in 2007 that the airline will report an operating profit. It has not posted a net profit in a decade.

Air India’s performance has improved in the past two years but it has failed to meet critical targets set in a turnaround plan drawn up by the government.

The airline has principally failed to meet its target of bringing down the net loss to Rs 2,369 crore in 2016-17. The government in 2012 provided the airline a Rs 30,000 crore bailout on condition that it will meet specified operational milestones.

NEW DELHI: The CBI has initiated investigations into key decisions made on Air India when the United Progressive Alliance was in power, including the merger of Air India and Indian Airlines, purchase of 111aircraft by the national carrier and giving away of profitable routes to rival airlines.

The agency filed two cases on the aircraft purchase deal, another on giving away the routes and started a preliminary inquiry into the merger of the airlines. In a statement, the CBI said it started the probe following orders from the Supreme Court. Air India had put an order for 111aircraft — 68 from Boeing and the balance from Airbus.

Union Civil Aviation Minister Ashok Gajapathi Raju today expressed his concern over ‘poor’ financial condition of the airline and said that the government is mulling all options to revive India’s premiere airline, and that even privatisation is not exactly ruled out, an ANI report said. “Air India’s finances are very bad, impoverished part of Air India has to go, but we are looking at all alternatives to revive it,” the minister was quoted as saying by the agency.

Documents reviewed by Business Standard show that the Modi administration has been aggressively pumping money in a bid to resuscitate Air India’s fortunes. From August 2014, a couple of months after the Narendra Modi led National Democratic Alliance (NDA) government assumed power, till March 2017, Rs 16822 crore have been infused into Air India from tax payer’s money. The first tranche of Rs 2000 crore was received by Air India in August 2014. Subsequently, six more payments totaling Rs 1947 crore were made from September 2014 to February 2015.

In 2014, barely two months after the Narendra Modi government took charge, the Prime Minister’s Office (PMO) called a meeting to discuss the possibility of Air India advancing its revival by two years and subsequently going in for a stake sale. Three years later, despite some improvements, the state-owned carrier continues to struggle financially and is unlikely to achieve its target of making a net profit in FY19.

Despite lower fuel prices and higher passenger numbers, accumulated debt stood at Rs 46,000 crore and in April the airline took loans to pay salaries to its 16,000 employees.

Prime Minister Narendra Modi on Friday announced that India's flag carrier Air India would begin direct flights between Colombo and the holy city of Varanasi from August.

Modi, who is on a two-day visit to Sri Lanka, made the announcement of the beginning of the flights during his address at the inauguration of the International Vesak Day, the biggest festival of Buddhists.

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