Banks worried over Air India divestment route

Lenders say hiving national carrier's working capital debt puts their exposure at risk

Lenders to Air India have expressed concern over the government’s plan to transfer the national carrier’s working capital debt to a separate subsidiary to make the state-owned airline attractive to buyers. Lenders worry that a move to sell aviation assets, including planes, before clearing the debt could make their exposure vulnerable.

The government proposes to transfer Air India’s working capital loans, short-term loans, and non-aviation assets to a separate company, readying the airline for prospective buyers, according to government officials. 

At the end of FY2016-17, Air India’s debt stood at Rs 48,876 crore. Of that, a significant portion (Rs 31,517