Air India mega revival plan revealed; Rs 29,000 cr debt shift to SPV ordered

Modi government mega plan to improve the financial condition of Air India has been revealed with the main goal being to get the 'Maharaja' to earn Rs 2,000 cr through cost-cutting and revenue growth. Air India's specific alternate mechanism too has been fixed.

Under this plan, the government will take 10 to 12 important steps to improve the financial condition of Air India. The focus of these measures will be mostly on cost-cutting and revenues.

According to this plan, if the airline will work on the recommended 10 to 12 steps, the government can expect additional revenue or savings of Rs 2,000 cr annually.

According to the Civil Aviation Secretary R N Choubey, this mega plan has been shown to the Inter-Ministerial Group recently, which has shown the green flag.

The government has sent a clear message to Air India management that it will help the airline only on the basis of its performance.

The government will also shift about Rs 29,000 cr to the Special Purpose Vehicle (SPV), which is a large part of the debt of around Rs 50,000 cr on Air India. Due to this one step,  heavy burden of debt on Air India will be substantially reduced.

The deduction of the debt amount, directly means that Air India will not have to pay much interest to repay the remaining amount, which will provide great relief to Air India.

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After reviving the financial condition of Air India, the government will again step forward and push its agenda of disinvestment. According to the ministry officials, the financial position of Air India will not only strengthen the path of disinvestment, it will also get good value for Air India as well.