The other members of the SPV’s six-member board...
will comprise Air India’s director, finance, and joint secretaries in the aviation ministry and the departments of expenditure, economic affairs and disinvestment.
A high-level ministerial committee led by finance minister Arun Jaitley along with senior colleagues Nitin Gadkari and Suresh Prabhu had been assigned to draft a revival plan.
Air India has a total debt of Rs 55,000 crore. Once the revival plan is implemented, the national carrier will be left with debt of about Rs 26,000 crore, mostly on account of aircraft loans.
After the transfer, the airline’s annual interest liabilities will decline by Rs 2,700 crore from Rs 4,400 crore to Rs 1,700 crore.
The airline has started discussions with banks as they will have to agree to the debt transfer, another senior official said. Terms and interest rates won’t change as that would amount to debt restructuring and that’s not part of the plan, said one of those cited above.
“Banks will have to take approvals from the respective boards for the transfer,” a leading daily quoted an official as saying. Under the last rescue package, in 2013, the then United Progressive Alliance government approved an equity infusion of Rs 30,231crore until FY21. The airline has already received about Rs 28,000 crore of this, in installments.
Government officials said scrutiny will be far more stringent to ensure that the airline recovers. “While Air India is already being monitored on a lot of parameters, including operations and revenue generation, the government will also monitor a structured cost reduction plan for Air India and bring it in line with its competitors,” said the official.
Amid rising fuel prices and a depreciating rupee, Air India has been struggling with its finances and has sought government help to clear its dues to foreign and Indian lenders apart from vendors.
The government had provided interim support of about Rs 980 crore as equity and a sovereign guarantee to raise Rs 2,000 crore from banks, which the airline has availed of.
The airline has also raised Rs 1,000 crore from the National Small Savings Fund, prompting criticism over prompting criticism over the money from this source being used to shore up an ailing company. The bailout package for Air India was sought by the aviation ministry after the government failed to find buyers for a 76 percent stake in the airline. The government sources said divestment is still on the agenda.