The finance ministry has turned down Rs 300-billion fund-infusion proposal for Air India in the absence of a clear turnaround plan. The civil aviation ministry had sought the package to wipe out the debt obligation of the state-owned airline, defaulting on salary disbursements and payments to vendors.
The finance ministry has instead asked the airline to transfer its non-core assets and subsidiaries to a special purpose vehicle (SPV). Those assets would be monetised to reduce the company’s unsustainable portion of the debt. Of the Rs 500-billion total debt, around Rs 220 billion has been termed unsustainable, implying it cannot be serviced with the cash flow income.
Of the overall debt component, aircraft loans account for about Rs 160 billion, which has