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  Business   Companies  16 Jun 2017  Govt may write off Air India's Rs 30,000 crore debt

Govt may write off Air India's Rs 30,000 crore debt

Published : Jun 16, 2017, 11:13 am IST
Updated : Jun 16, 2017, 11:13 am IST

Report says it is expected that govt would exit Air India by March 2018.

Air India has a total debt of Rs 60,000 crore.
 Air India has a total debt of Rs 60,000 crore.

Mumbai: The government is all set to write off Rs 30,000 crore that it extended to the ailing national carrier Air India as a bailout package, according to a report in The Financial Express. The Centre has set a target of raising Rs 72,000 crore from strategic sale of ailing public sector undertakings.

The report adds that Union Cabinet led by Prime Minister Narendra Modi would soon take up a cabinet note in this regard. It is also expected that banks would also go for a haircut that would reduce total cost of divestment to the government.

"While the write-off is of the carrier’s liabilities not backed by assets, the government might also have to incur an expenditure for the settlement of the sovereign-backed part of Air India's aircraft loan of about Rs 21,000 crore," the FE report said.

The Civil Aviation Ministry has also prepared a rough estimate of airline's physical assets including the carrier's 115-strong aircraft fleet. Assets like Boeing Dreamliners, land parcels, buildings and valuable flying/landing rights and parking slots at airports across the world are valued at Rs 30,000 crore.

The report said it is expected that the government may leave the airline in March 2018 and most probably hand over the charge of running the airline to a private player. At present, India's Foreign Direct Investment rules allow a foreign carrier to  hold up to 49 per cent stake in an Indian flyer.

The report adds that it would be much more difficult for the government to stick its neck out in the open as Air India's Rs 50,000 crore revival plan would not land the Centre in good stead.

The carrier has not reported a profit over the last decade and it continues to bleed its finances as well. Air India has been reporting a cash loss of Rs 200 crore every month. However, all the efforts to resuscitate the carrier have turned out to be futile.

Tags: air india, air india privatisation, divestment, disinvestment, bailout package
Location: India, Maharashtra, Mumbai (Bombay)