Monday, October 02, 2017

New owners of Air India won't have to worry about the airline's debt

New Delhi: The new owners of Air India following divestment may not have to worry about its gargantuan debt as the government has decided to move much of this into a special purpose vehicle (SPV) before selling the carrier, senior aviation ministry officials said.

The committee on Air India's divestment led by Finance Minister Arun Jaitley took this decision at a meeting on August 30, they said.

"The committee decided to transfer all debt and assets of Air India to an SPV that will be managed by the government The airline will be sold only with aircraft debt on its books. This will make the airline a much more lucrative proposition," said one of the officials.

Air India has a total debt of Rs 52,000 crore and about Rs 33,000 crore is on account of working capital loans, which will be transferred to the SPV. The remaining is against aircraft purchases, which will be with the company that's put up for sale. Another official said the valuation would improve significantly if the working-capital debt is transferred to the SPV.
02/10/17 Mihir Mishra/Economic Times