Govt waives off Rs 29,000 crore Air India debt

The government has cleared a plan to transfer about Rs 29,000 crore of its Rs 55,000 crore debt to a Special Purpose Vehicle (SPV) that will help reduce airline’s annually interest outgo substantially, a top aviation ministry official said. “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,” aviation secretary R N Choubey told reporters. This was reported by ET first on November 5, 2018. According to the plan, The government is transferring the airline’s working capital debt of about Rs 29,000 crore to 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.Air India has a total debt of Rs 55,000 crore. Once the revival plan is implemented, the national carrier will be left with debt of about Rs 26,000 crore, mostly on account of aircraft loans.After the transfer, the airline’s annual interest liabilities will decline by Rs 2,700 crore from Rs 4,400 crore to Rs 1,700 crore.As part of the revival plan, the government has also asked Air India to show financial benefits of Rs 2,000 crore annually. Meanwhile, the government had provided interim support of about Rs 980 crore as equity and a sovereign guarantee to raise Rs 2,000 crore from banks, which the airline has availed of. The airline has also raised Rs 1,000 crore from the National Small Savings Fund.

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