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The government will provide substantial relief to Air India by moving ₹29,000 crore of its total ₹55,000-crore debt to a Special Purpose Vehicle (SPV).
To move the debt of ₹29,000 crore to the SPV, Air India Asset Holding Company Limited, the airline will need to get the concurrence of the banks from which the funds have been raised.
Since this could be a cumbersome and time-consuming process, the other option being examined is for the SPV to raise funds which the government will undertake.
The SPV’s debt will be retired from the funds that are raised from a sale of Air India’s other assets — land, buildings, paintings and artefacts, a senior Civil Aviation Ministry official said on Thursday.
A clear picture on whether the SPV will raise money or whether Air India will approach all its lenders for moving the debt to the SPV will emerge soon.
Easing the burden
Moving ₹29,000 crore of the debt will ease the financial burden on the State-owned airline.
“If the debt is moved to the SPV, Air India will not be required to raise money to service the debt,” a senior government official said.
The decision to shift the debt to the SPV will see the annual interest burden for Air India come down from around ₹4,400 crore to about ₹1,700 crore.
The remaining debt of ₹26,000 which is largely related to aircraft purchase will remain on the books of Air India, the official said.
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