India likely to let suitors decide on taking Air India debt

India is ready to sweeten the deal for the sale of Air India, the loss-making state-owned carrier, a finance ministry official said. The government is considering allowing potential suitors for Air India decide how much of the flag carrier’s debt they want to take on as part of the deal, Disinvestment Secretary Tuhin Kanta Pandey said. The bid date is also likely to be extended beyond Oct. 30 to give investors time to make an offer, he said. “We will remove the constraints that the current structure of the transaction poses for investors,” Disinvestment Secretary Tuhin Kanta Pandey said. “We are now thinking of letting the market determine the level of debt. That means we don’t freeze it.” Current rules require bidders to take over the carrier’s $3.3b of aircraft debt, deterring buyers. Air India has been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines, and has relied on taxpayer money to keep flying, with the bailouts adding to the pressure on already strained government finances. “It is very difficult for the government to keep on sustaining Air India. Winding up could be disastrous,” Pandey said. “The only course now is to proceed toward disinvestment.”<br/>