Government to clear all Air India debt this fiscal

Air India planes parked at the IGI Airport in New Delhi. File   | Photo Credit: PTI

Air India will pay back all its debt and dues owed to banks, oil companies, airports and aircraft lessors by the end of this financial year, a senior government official said.

On Friday, the government sought Parliament’s approval for infusion of ₹62,057 crore into its company or special purpose vehicle (SPV) that hosts Air India’s residual debt, liabilities and some assets. These were moved from Air India in order to clean the airline’s balance sheet and attract potential buyers for the airline's privatisation.

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“Most of Air India’s loans were overdue. One option was to issue government guaranteed bonds but that could take us several years to make repayments. Where the loans are not due yet, banks would be required to enter into a fresh contract with the SPV, which they may not want to do since it doesn't house a lot of assets. Therefore, the money sought from Parliament will help us make all settlements and clean-up the airline,” said the senior government official. He added that this would mean that banks, most of which are public sector ones, will soon receive their payments.

The special purpose vehicle, known as Air India Assets Holding Limited, will receive the equity infusion from the government. It will then proceed to make settlements. When asked if this would be done within this fiscal, the official replied, “Yes”.

Explaining the break-up of the equity infusion sought from Parliament, the official said, “₹61,562 crore is Air India’s debt as of August 31, 2021. In addition to this there are excess current liabilities of ₹15,834 crore, which gives us a figure of ₹77,396 crore. Out of this if we remove debt amount of ₹15,300 crore to be taken on by Tatas, we get an amount of ₹62,096 crore. This was an estimate at the time and has now been determined as ₹62,057 crore.”

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Printable version | Jan 25, 2022 7:51:51 AM |

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