The Finance Ministry has refused to infuse Rs 30,000 crore into Air India, the ailing public sector unit (PSU) in the absence of a clear turnaround plan, Business Standard has reported. The civil aviation ministry had asked for the infusion to clear the airline’s debt and pending salary payments.
“The last bailout package for the airline didn’t improve the functioning of the airline. Instead the burden kept on increasing. So it has been proposed that the airline should transfer the non-core assets and its subsidiaries into the special purpose vehicle (SPV), following which the government will monetise the assets and pay off the unsustainable portion of the debt. That will help in cleaning the airline’s books,” a source in the Finance Ministry told Business Standard.
Another official has said that process to sell Air India Engineering Services Limited (AIESL) and Air India Air Transport Service Limited (AIATSL), two subsidiaries of the ailing PSU has been initiated. The sale of these subsidiaries is expected to lighten the debt burden of Air India.
The Finance Ministry’s stand may have a political angle too, as the government plans to spend on agriculture and infrastructure during an election year. Financial experts have also said that spending tax payer money on a failing airline is not good for the Indian economy.
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