'National carrier' Air India is burdened with a debt of Rs 29,464 crore, a factor that was making its privatisation an onerous task even after the government had assured potential buyers of not passing on the entire liability; the proposal of an SPV accepted by the Narendra Modi government now is expected to make the airlines an even more attractive buying proposition
New Delhi: The Narendra Modi government on Thursday set the Air India disinvestment process in motion. The Cabinet has given a nod to a "post-facto approval" for the formation of a Special Purpose Vehicle (SPV) with a purpose to transfer the huge debt of Air India and its subsidiaries to the body.
The process above is put in place with an intent to enable the government to place a debt-less airline on sale.
Right now, the national carrier is burdened with a debt of Rs 29,464 crore, a factor that was making its privatisation an onerous task even after the government had assured potential buyers of not passing on the entire liability.
A special committee constituted to look into the ways and means of disinvestment of 'the Maharaja' suggested the solution in the form of an SPV.
The SPV has been named Air India Assets Holdings Limited. A government release said it has been created "for warehousing accumulated working capital loan not backed by any asset along with four Subsidiaries (Air India Air Transport Services Ltd. (AIATSL), Airline Allied Services Ltd. (AASL), Air India Engineering Services Ltd. (AIESL) and Hotel Corporation of India Ltd. (HCI), non-core assets painting and artefacts and other non-operational assets of Air India Ltd. to an SPV".
Non-core assets of the airline, like a huge number of prized paintings and artefacts, will be transferred to this new body too. This is done with a sole intent to keep the airline sleek and without any burden.
This is expected to make India's national airline an attractive offer for buyers in a competitive market, where the airline has so far received a lukewarm response.
Last Updated 11:15 AM IST