Delhi to challenge Canadian court order against Air India

The Airports Authority of India (AAI) is taking legal recourse against a Canadian court order that allows the seizure of millions of dollars collected by the International Air Transport Association (IATA) on behalf of Air India (AI, Mumbai Int’l) and the Indian regulator, reports Indian Express.

This follows after the Superior Court of Quebec passed separate orders on November 24 and December 21 on multiple petitions filed by three Mauritius-based shareholders of India’s Devas Multimedia Private Limited to enforce arbitration awards against the Indian government.

This includes USD6.8 million in air service fees collected by IATA on behalf of the AAI and an as-yet-undisclosed amount in Air India ticket sales collected through IATA’s Billing and Settlement Plan (BSP).

“The AAI has not been served any order by the Quebec Court, Canada, in this matter. However, IATA shared certain documents on the AAI’s request for suspending the transfer of the amount collected on behalf of the AAI. The AAI is taking legal recourse to defend itself,” the regulator said in a statement.

The Devas shareholders involved are Devas (Mauritius) Ltd, Telcom Devas Mauritius Ltd, and Devas Employees Mauritius Pvt. Ltd. Air India removed its inventory from the Global Distribution System (GDS) following the December 21 court order.

The dispute dates back to a deal annulled in 2011 between Devas Multimedia and Antrix Corp, a state-owned Indian Space Research Organisation (ISRO) unit, by which Antrix Corp would have leased satellite transponders to Devas. Antrix Corp has initiated liquidation proceedings against Devas Multimedia pending before the Karnataka High Court in India.

Meanwhile, the Delhi High Court on January 4 dismissed an attempt to have the government’s disinvestment in Air India set aside. The appeal by Bharatiya Janata Party (BJP) leader Subramanian Swamy was based on the allegation that the government’s methodology in the valuation of the national carrier was “arbitrary, illegal, and against the public interest,” reported The Economic Times. Swamy is an economist and statistician who serves as a Member of Parliament in Rajya Sabha, the upper house of the Indian Parliament.

This comes ahead of the Tata Group’s 100% takeover of Air India and Air India Express (IX, Mumbai Int’l) following its successful bid announced in October last year, representing the first privatisation in the country in 20 years. The Tata Group also takes over 50% of ground handler Air India SATS in a joint venture with the government, which retains 50%. The Tata Group has been granted indemnity from USD4.7 billion worth of Air India debt in its shareholder agreement with the government.

According to the share purchase agreement signed on October 25, the government has sold Air India for INR180 billion (USD2.4 billion), of which the Tata Group will pay INR27 billion (USD362.6 million) in cash and INR153 billion (USD2 billion) for Air India’s existing debt.

Lenders to Air India have reportedly offered Tata a loan of INR350 billion (USD4.6 billion) for a weighted average dividend of 4.25% – the rate at which the state is lending for one year, reports Hindi publication Zaroorat. Tata had invited bids from the airline’s existing lenders for a one-year general loan of INR230 billion (USD3 billion). This would include INR180 billion (USD2.4 billion) to repay the carrier’s debt and an additional INR50 billion (USD671 million) for initial operating costs.

Tata will notify each lender of the allotment in the first week of January and draw the sanctioned limit between January 10 and 15, 2022, the report said. The takeover and refinance of Air India’s debt was due to be completed before January 23, the long-stop date for closing the Air India agreement with the government. However, regulatory processes appear to have delayed the deadline, now extended by mutual consent to the end of January, reports the Hindu newspaper Jagran.

By August 31, 2021, Air India had a total debt of INR615.62 billion (USD8.2 billion); 75% of this debt will be transferred to Air India Assets Holding Limited (AIAHL), a special purpose vehicle, before the airline is handed over to the Tata Group.

According to company information, in 2020/21, the combined revenue of Tata companies was USD103 billion.