INSUBCONTINENT EXCLUSIVE:
The inter-ministerial panel has decided to divest government's stake in Air India Air Transport Services.NEW DELHI: The Central government
has decided to transfer Air India's debt worth Rs 29,000 crore to a special purpose vehicle (SPV) -- Air India Assets Holding Ltd, a
senior government official said on Thursday
According to the official, the decision to transfer the Rs 29,000-crore debt to the SPV was taken by an inter-ministerial panel -- Air India
Specific Alternate Mechanism -- which has been formed to look after the divestment of the national carrier
The move assumes significance as it will lessen the interest payment obligation of the airline on its total outstanding debt of over Rs
50,000 crore.The official told reporters here that two possible ways of transferring the debt are under consideration, with the first
involving the banks' nod to shift the owed amount to the SPV, while the other mandating the SPV to pay off the Rs 29,000 crore debt by
raising funds.In addition, the inter-ministerial panel has decided to divest the government's stake in Air India Air Transport Services
Ltd (AIATSL).The decision by the panel headed by Finance Minister Arun Jaitley envisaged that the amount raised from the divestment of
AIATSL will be used to retire some of the accumulated debts of Air India.On Wednesday, Civil Aviation Secretary R.N
Choubey had said that the national carrier has commenced a "cost-cutting and revenue augmentation" plan to garner "financial benefits" of Rs
2,000 crore per annum.(: Government Owes 1,146.86 Crore Rupees To Air India For VVIP Charter Flights)The cost cutting and revenue
augmentation plan was recently implemented by the airline.He pointed out that the airline will work on 10-12 items under the plan, which if
implemented in entirety, is expected to result in financial benefits of Rs 2,000 crore per annum.However, these benefits will be over and
above the financial relief that the airline will get by lowered interest payments on its legacy debt.Besides, any future financial support
to the airline will be contingent on the results that it achieves by implementing the plan.Accordingly, as and when the airline would
require financial assistance, its management will be required to show the results obtained from the cost cutting and revenue augmentation
plan and improvements in efficiency.He added that airline will not be allowed to default on its payment obligations.(Except for the
headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
