Air India stake sale: Buyer to get only Rs 10,000 crore of airline debt

This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process

The government is likely to transfer about Rs 20,000 crore of additional debt from Air India’s books in order to make it lucrative for buyers. The move will leave Air India with about Rs 10,000 crore of debt. This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process. Potential bidders had expressed inability to take over the debt-laden airline.

As of March 31, Air India had a debt of Rs 58,351 crore.

While the Air India Alternative Special Mechanism (AIASM) headed by home minister Amit Shah is yet to take call on it, it has been proposed to the ministerial group that the move is necessary to make it attractive for buyers. Transaction advisor EY has pointed out high debt as one of the reason why investors didn’t show any interest to acquire the airline last year.

Further, the argument is that the yearly expenditure to run Air India is more expensive for the government than to pay annual interest on a debt of Rs 50,000 crore. The government has already invested Rs 30,000 crore under a bailout package extended by the previous UPA regime in 2012 for 10 years.

The government has already transferred Rs 29,500 crore of debt to the special purpose vehicle Air India Asset Holding Limited (AIAHL). In order to clear that debt, the SPV has already raised Rs 14,000 crore from bond market. It will further raise about Rs 8,000 crore through a government-guaranteed bond issue over the course of the week. The deal becomes more lucrative as most of the the debt is backed by assets like aircraft that Air India owns.

Second wave of NPAs? SBI, BoB, YES Bank could be hit, says Jefferies

YES Bank, Bank of Baroda, SBI, IndusInd Bank, and RBL Bank are amongst the banks most prune to “high risk” emanating from Anil Dhirubhai Ambani Group (ADAG), Cox & Kings, CG Power, and DHFL

Bank of Baroda (BoB), Axis Bank, ICICI Bank, and State Bank of India (SBI) could be staring at another wave of non-performing assets (NPAs), especially in the telecom and construction sector, as there appears to be a divergence between the credit rating assigned and the financial health of the corresponding corporate entity, says the latest sector report by Jefferies.

In a note on Indian banks and financial institutions co-authored by Nilanjan Karfa and Harshit Toshniwal, Jefferies suggests there is a potential “meaningful divergence” between the ratings and the debt repayment ability. YES Bank, Bank of Baroda, SBI, IndusInd Bank, and RBL Bank are amongst the banks, Jefferies says, that are most prone to “high risk” emanating from Anil Dhirubhai Ambani Group (ADAG), Cox & Kings, CG Power, DHFL and Essar Shipping.

Given the elevated debt serviceability ratio (the higher the ratio the poorer the ability to sustain debt levels), the ‘A’ rated corporate are the most prone to further credit rating downgrades. The report, however, points out that debt or interest repayment abilities of ‘BBB’ and below rated companies have seen an improvement….

DGCA orders check for cracks in 23 SpiceJet Boeing 737-NG aircrafts

Nineteen passenger aircraft above 26,000 flight cycles and four freighters having above 36,000 cycles of SpiceJet will be affected by the order

Indian aviation regulatory body, Directorate General of Civil Aviation (DGCA), has ordered checks of the joining areas of wings and body of all Boeing 737 Next-Generation (NG) aircraft in India for those which have completed over 26,000 flight cycles (FC).

Recently, cracks were found in three Boeing 737 NG planes having more than 36000 flight cycle at the wing to body frame fitting during a check. Boeing has been apprised about the cracks. Nineteen passenger aircraft above 26,000 flight cycles and four freighters having above 36,000 cycles of SpiceJet will be affected by the order. Vistara and Air India Express are currently flying nine and 25 aircraft of Boeing 737s but they will not be affected as their aircraft have yet to touch 17,000 flying cycles. A flight cycle is one complete flight from take-off to landing.

A senior DGCA official said the checks will start this week. “An airworthiness directive is expected on Wednesday that will be effective from Thursday (for the checks). The inspection will last an hour and will be done with the help of Boro equipment,” he said…

Air India, subsidiaries to ban single-use plastic from Gandhi Jayanti

In his Independence Day speech, Prime Minister Narendra Modi had urged people to shun single-use plastic and encouraged usage of jute and cloth bags to protect the environment

Air India on Thursday announced that the usage of single-use plastic on the flights of its subsidiaries — Air India Express and Alliance Air — will stop from October 2, on the day of Gandhi Jayanti.

In the second phase, the single-use plastic will be banned in all Air India flights, it said. In his Independence Day speech, Prime Minister Narendra Modi had urged people to shun single-use plastic and encouraged usage of jute and cloth bags to protect the environment.

“Air India is going to ban single-use plastic from 2nd October. In first phase it will implement in all flights of Air India Express and Alliance Air flights. In 2nd phase, it will be implemented in Air India flights,” an Air India spokesperson said.

He said banana chips and sandwiches on Alliance Air India flights and Air India Express flights will be packed in butter paper pouches instead of plastic pouches from October 2. Cake slices uplifted in snack boxes will be replaced with muffins to avoid the present plastic wrapping, the spokesperson said. He said crew meal cutlery will be replaced with light weight steel cutlery and only sturdy paper cups would be used to serve tea and coffee.

For special meals that are ordered and paid for by passengers in advance, the crew of Alliance Air and Air India Express will only use “eco-friendly birch wood cutlery” from October 2, the spokesperson said.

Boeing 737 MAX adopts safety feature earlier sold as option after crashes

The development comes as the manufacturer struggles to cope with the fallout from both the Indonesia crash and another in Ethiopia this month

International News: Boeing’s 737 MAX aircraft will be outfitted with a warning light for malfunctions in the anti-stall system suspected in October’s fatal crash in Indonesia, an industry source told AFP Thursday, standardizing a feature previously sold as an optional extra.

The development comes as the manufacturer struggles to cope with the fallout from both the Indonesia crash and another in Ethiopia this month, which have cast a spotlight on the safety certification process and shaken confidence in a plane that is crucial to its future plans.

Known as a “disagree light,” this safety feature will become standard and is among the modifications the company will present to US authorities and clients in the coming days, the source said on condition of anonymity. Neither the Lion Air aircraft crashed in Indonesia, nor the Ethiopian Airlines jet, had the feature, the source said. More than 300 people perished in the two cases.

American Airlines, which operates 24 737 MAX 8, had bought the option, anticipating potential malfunctions, a source close to the matter told AFP. So too had Southwest Airlines, the plane’s biggest customer, which also bought an additional “Primary Flight Display” option, according to a spokesperson.