Delhi to write off Air India debt, expatriate CEO to be appointed

Air India (AI, Mumbai Int’l) will repay all of the debt it owes to donors, airports, fuel suppliers and banks by the end of this fiscal year, i.e. by March 31, 2022, according to an anonymous senior government official. the Hindu told the newspaper.

The government sought parliamentary approval on December 3 to transfer INR 620.57 billion ($ 8.23 ​​billion) to Air India Assets Holding Limited, a special purpose vehicle (SPV) established in 2019 to attract potential buyers by storing the substantial residue of the national carrier. debt, liabilities and a number of assets.

“Most of Air India’s loans were in arrears. One option was to issue government guaranteed bonds, but it could take us several years to make the repayments. When the loans are not yet due, banks would be required to enter into a new contract with the SPV, which they may not want to do because it does not contain a lot of assets. So the money requested from Parliament will help us to conclude all the regulations and clean up the airline, ”the official said.

The SPV will receive an injection of equity from the government and then proceed to settle all outstanding debts by the end of this fiscal year, he added. This does not include the 153.3 billion INR (2.03 billion USD) that Air India buyer Tata Sons has agreed to take over.

The INR 620.57 billion “is Air India’s debt as of August 31, 2021” after subtracting the debt Tata will assume from a total of INR 773.96 billion (USD 10.26 billion), the official said. However, this does not include an additional figure of excess current liabilities of INR 150.83 billion (USD 2 billion).

Separately, “officials with knowledge of the matter” told The Economic Times that Tata Sons had selected an expatriate to lead Air India as chief executive and that it would be largely up to the new CEO to finalize the news. management team of the carrier. The conglomerate is also said to have shortlisted members to replenish the board of directors of the newly acquired national carrier as it prepares to officially take over the airline in January 2022.

Aviation experts and members of Tata’s mergers and acquisitions team will make up the new board of directors, and a retired official will be appointed independent director, the sources said. Traditionally, the chairman of Tata Sons – currently Natarajan Chandrasekaran – has been chairman of all of the group’s major operating companies and this is likely to be the case for Talace, the wholly-owned subsidiary of Air India, as well. Official announcements on the appointments will be made in January, the officials added.

Air India did not immediately respond to ch-aviation’s request for comment.

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