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Government asks ministries and departments to settle Air India dues and make cash payments for tickets

The government on Wednesday called on ministries and departments to immediately pay dues to heavily indebted Air India and now buy tickets only in cash. Earlier this month, the government decided to sell Air India to Talace Pvt Ltd, a unit of the holding company of the Tata group, a salt-to-software conglomerate, for Rs 18,000 crore.

The Expenditure Department, under the Ministry of Finance, in an order of 2009, had stated that in cases of air travel (both domestic and international), including LTC where the Indian government bears the cost of the passage air, officials can only travel by Air India. The spending department said the Air India and Air India Express divestment process is underway and the airline has stopped extending its credit facilities due to airline tickets.

“Therefore, all ministries / departments are required to pay Air India dues immediately. Air India plane tickets can be purchased in cash until further notice,” the department said in a memorandum from office. He also ordered ministries / departments to alert his subordinate offices / institutes under his administrative control to comply with this office order.

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On October 25, the government signed the share purchase agreement with Tata Sons for the sale of the national carrier Air India. Tata’s will now seek various regulatory clearances before the airline surrenders by the end of December. The deal involves a cash payment of 2,700 crore and the assumption of the airline’s debt of 15,300 crore.
The government is selling its 100% stake in Air India and Air India Express as well as its 50% stake in the ground handling company AISATS. Tata beat the offer of Rs 15,100 crore by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100% stake in the loss-making carrier.

As of August 31, Air India had a total debt of Rs 61,562 crore. And 75 percent of that debt or Rs 46,262 crore will be transferred to an AIAHL special purpose vehicle before handing over the loss-making airline to the Tata group.

First publication: STI



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