“The central government has pumped in Rs 56,000 crore in the last past decade in a bid to keep the carrier afloat,” sources said
New Delhi: The central government is considering a plan which excludes more than half of Air India Ltd’s $11 billion of debt in their latest test attempt to lure investors to the struggling carrier said the close sources.
Prime Minister Narendra Modi’s government plans to ask proposed investors to take over Rs 30,000 crore of the airline’s debt, which are backed by the carrier’s aircraft, sources said. The BJP led government may call for the so-called expression of interest in early December 15.
Modi’s administration has failed to attract any bidder for the carrier last year, is keen to sell the company to help bridge a widening fiscal deficit following dismal tax collections and cuts to corporate tax rates worth $20 billion. A few weeks back, the central government decided to sell its entire stake in the country’s second-largest state refiner and its biggest shipping company.
Unprofitable for a decade with taxpayers bailing it out, again and again, Air India appealed to the investor is contingent on the governments’ ability to write off the debt not backed by assets. “The central government has pumped in Rs 56,000 crore in the last past decade in a bid to keep the carrier afloat,” sources said.
A spokesperson of the Finance Ministry, which handles assets sales, was not immediately available for comment.
Sources said “The Central Government will absorb Rs 50,000 crore worth of obligation. Air India Assets Holding Ltd, a special purpose vehicle, holds about 300 billion rupees of the state-owned carrier’s debt and some of its assets,”.The SPV expects to raise Rs 10,000 crore selling the assets.
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