The government is looking to sell Air India in such a way that the acquirer will not have to take on its working capital debt, reported The Economic Times, citing sources. The new strategy will halve the debt burden on the carrier making it more attractive for prospective buyers, it noted.

The move is part of the government's second attempt to divest its stakes in cash-starved state airline. The new strategy could be helpful for the sale as this would mean that the total debt burden on Air India will fall to Rs 15000 crore, said the report.

The proposal, the report added, will be likely discussed during the first meeting of a ministerial group on Air India’s divestment headed by home minister Amit Shah.

While the move will likely draw more bidders it will also lead to further government funding into the carrier.“The bigger problem with this proposal is managing the optics of the government selling the company without debt…reducing debt may ensure more bids for the carrier, which did not get any bids last time,” an official was quoted as saying in the report.

The government had already transferred Rs 29,400 crore of debt last year to Air India Asset Holdings Ltd, said the report. This, in turn, had led to the fall of Air India’s debt from Rs 59,000 crore to around Rs 30,000 crore.

First Published:Sept 18, 2019 10:25 AM IST