Prime Minister Narendra Modi’s administration 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, the people said, asking not to be identified, citing private information. The government may call for the so-called expression of interest as early as December 15, the people said.
PM Modi’s administration, which 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. Last week, the 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 repeatedly, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. The government has pumped in Rs 56,000 crore in the last past decade in a bid to keep the carrier afloat, the people said.
A spokesman at the finance ministry, which handles assets sales, was not immediately available for a comment.
The government will absorb Rs 50,000 crore worth of obligations, the people said. Air India Assets Holding Ltd, a special purpose vehicle, holds about Rs 30,000 crore of the state-owned carrier’s debt and some of its assets, they said.
The SPV expects to raise Rs 10,000 crore selling the assets, the people said.