Centre announces stoppage of credit facility by Air India; asks Ministries to clear dues

The Government of India on Wednesday released a statement regarding the clearing of dues for the debt-laden Air India airline and asked various Ministries and departments to clear their dues with the airline carrier. The letter was addressed to the concerned ministries and departments who had availed the service of the airline but were yet to clear their dues. On October 25, the government signed the share purchase agreement with Tata Sons which guaranteed the sale of the national carrier Air India to subsidiary Talace. The deal involves a 2,700 crore cash payment and takeover of the airline's Rs 15,300 crore debt.

As of August 31, Air India had a total debt of Rs 61,562 crore. While elucidating about the terms and conditions of the purchase made by Tata, the managing body of the airline mentioned that 75% of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle AIAHL before Tata leads the debt struck airline to a new journey.

Finance Ministry urges ministries to clear dues

The Expenditure Department chaired by the Finance Ministry informed that the process that would help in the divestment of Air India and Air India Express was yet not complete. Saying so, the concerned department notified that it had ceased extending credit facilities on accounts for air travel. The department stated, ''Therefore, all Ministries/Departments are directed to clear Air India dues immediately. Air tickets from Air India may be purchased in cash till further instructions.'' While passing this notification it directed all ministries to alert its subordinate offices/institutes working under its administrative control to strictly refer to the same. 

Tata to fly Air India again

It is pertinent to note here that on October 8, Tata Group's Subsidiary Talace had won the bid of ₹ 18,000 crores to lay hands on Air India and revamp its functioning. The government will be divesting 100% ownership of Air India and Air India Express. This deal also includes 50% stake of AISATS, which take care of the ground handling of the aircraft. With this deal, TATA flew past the Rs 15,100-crore offer put down by Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its entire stake to Air India. 

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