Air India CMD says bailout plan short-term measure, not alternative to divestment

New Delhi: Air India's Chairman and Managing Director (CMD) Pradeep Singh Kharola said on November 15 that the government's proposed move to pare Rs 29,000 crore of Air India's debt is a short-term measure and does not mean that plans to divest the national airline have been shelved.

Kharola said that the discussions to transfer Rs 29,000 crore out of Air India's near Rs 55,000 crore total debt to a special purpose vehicle (SPV) are in advanced stage and divestment will be taken up after the situation improves. "Temporarily, the divestment is kept on hold. As the scenario improves, the divestment process will restart," Kharola told PTI on the sidelines of IIM-Calcutta's 58th annual foundation day.

Non-core assets will be transferred as well

Along with the debt, the non-core assets will also be transferred to the SPV, which is likely to be known as Air India Assets Holding (AIAHL). "Initially, land and building will be moved and then the subsidiaries will follow," Kharola said.

The CMD said that monetising the non-core assets is likely to fetch close to Rs 29,000 crore.

The bailout plan will trim down AI's debt

If Air India goes through with the plan, it will be left with a debt of about Rs 26,000 crore, mostly accruing from aircraft loans. Following the transfer, the airline's annual interest liabilities is expected to decline by Rs 2,700 crore from Rs 4,400 crore.

The aviation ministry requested the government to provide a revival package after the plan to sell 76 per cent stake in Air India failed to take off earlier this year.