Modi weighs privatizing indebted Air India

Indian PM Narendra Modi is considering a proposal to privatize state-run Air India, possibly asking the buyer to absorb loans of about 200b rupees ($3.1b) linked to aircraft purchases, a person with direct knowledge of the matter said. The deliberations follow recommendations by a government panel for the sale of the money-losing carrier that has nearly $8b in debt, the person said. As for the rest of the carrier’s debt, the government has yet to decide whether to write off or reorganize it, the person said. The process may include disposing of Air India’s real-estate and other non-core assets worth about $3b before the sale or hiving them off, the person said. Air India spokesman Dhananjay Kumar and a spokesman for Modi didn’t immediately respond to requests for comments. Unprofitable for a decade with taxpayers bailing it out in the past six years, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. That is a political call Modi needs to take at a time when many of the nation’s state-run lenders have been seeking capital injection from taxpayer funds amid mounting bad loans. "Air India is a good vehicle for an investor if the non-aircraft related debt is taken care of and the balance sheet is cleaned up seriously and completely," said Kapil Kaul, South Asia CEO at Sydney-based CAPA Centre for Aviation. "This is going to be the fastest growing market for several years.”<br/>