Even as the government of India is making efforts to divest its complete holding in Air India, the airline’s debts have been seen to be going higher. By end of September 2019, there has been an increase of Rs 5,000 crore in debts, largely due to short-term loans, as per a Finance Express report. The total debt and liabilities of Air India (AI) now stands at over Rs 45,500 crore

After its first failed attempt to find a buyer for 76% equity in the airline, the government decided to give away 100% and in order to make the process easier, it is also looking to clean up the debt of the national carrier.

In the process, what would be left in the books would have been around Rs 20,000 crore in debts and on the assets side, 70 aircrafts plus the landing rights and parking slots and other facilities in the airports in India and around the world. Now, what happens to this new liability of Rs 5,000 crore remains to be seen. The government had floated a special purpose vehicle to shift debts to the extent of around Rs 20,000 crore.

The airline has also had to face problems from ATF suppliers, though state-owned. Indian Oil had issued a warning that it will stop supplying fuel to Air India at a few airports if its dues did not get released.

There have been a series of meetings at the level of bureaucrats to give the final shape to the expression of interest document. The government is hoping that one of the foreign airlines will tie-up with an Indian enterprise, from within the industry or from outside and then bid for Air India.

The way the carrier’s debts are mounting, the earlier the government concludes the deal, the better it is for the government.