Cabinet approves creation of SPV for Air India divestment

ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 26th June. Click Here for more information.

  1. The Cabinet has approved the setting up of a special purpose vehicle (SPV) for the disinvestment of Air India and its subsidiaries. Disinvestment is defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary.
  2. The name SPV is given to an entity which is formed for a single, well-defined and narrow purpose.The debts of the Air India and its subsidiaries would be transferred to the SPV.Then,the airline,with a relatively clean balance sheet, would be available to be sold.Later,the SPV could sell the assets one thing at a time,to realise better value and repay its portion of the debt from the proceeds.
  3. An SPV named Air India Asset Holding Ltd (AIAHL)was set up last year as part of financial restructuring of the debt-laden national carrier. The government has decided to transfer to the newly-created SPV the debt of Air India Limited amounting to Rs 29,464 crore.
  4. Moreover, the government has said that the subsidiaries which are not part of Air India strategic disinvestment such as (a)AIATSL (Air India Air Transport Services Limited) (b)AIESL (Air India Engineering Services Limited) (c)AASL (Airline Allied Services Limited) and (d)non-core assets, painting and artifacts and other non-operational assets of Air India Limited are to be shifted to the SPV.
  5. The government has been working on ways to revive the fortunes of Air India, which is estimated to have a debt burden of Rs 55,000 crore by disinvestment of Air India and its subsidiaries.
Print Friendly and PDF