Tuesday, July 11, 2017

Debt rejig failure likely set off move to sell AI

New Delhi: Air India’s unsuccessful efforts to restructure its debt, with both the Centre and lenders unwilling to back its various proposals, may have finally spurred the Cabinet to take the decision to privatise the national carrier.

Documents reviewed by The Hindu show that attempts by the airline to rejig its debt failed to convince the decision makers in the government at various levels, including the highest.

For instance, Prime Minister Narendra Modi’s office was hesitant about treating the government’s equity infusion into the national carrier as a grant, while the Finance Ministry was reluctant both to provide a guarantee fee for further borrowings as well as for slashing the fee payable to the government for securing Air India’s existing loans.

Air India has outstanding debt of about ₹52,000 crore, of which about Rs 22,000 crore is aircraft loan and the remaining is its working capital loan and other liabilities.
11/07/17 Somesh Jha/The Hindu