Civil aviation secretary RN Choubey said the government would transfer about Rs 29,000 crore of its Rs 55,000 crore debt of loss-making Air India's working capital debt to a special purpose vehicle, Economic Times has reported.
After the transfer is in effect, the national carrier’s annual interest outgo will decline from Rs 4,400 crore to Rs 1,700 crore.
The report quoted Choubey as saying that “The debt will be transferred to an SPV and the government will then be servicing loans. We are discussing whether the debt will be transferred to the SPV from Air India or the SPV will raise fresh loans and clear the national carrier’s debt”.
The working capital debt of about Rs 29,000 crore will be held by Air India Assets Holding (AIAHL).
AIAHL will be headed by Air India’s chairman, and other members of the SPV’s six-member board will comprise Air India’s director, finance, and joint secretaries in the aviation ministry and the departments of expenditure, economic affairs and disinvestment.
Earlier this week a government panel had decided to sell the profitable ground handling of Air India, Air India Air Transport Services, and use the proceeds to pare its debt further.
The airline had debts totalling Rs 48,000 crore in 2017, and its losses were of a similar amount. On top of it in the financial year 2016-17, it had accumulated losses of Rs 5,765 crore, most of it being a result of high debts.
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