India is considering a plan to exclude more than half of Air India’s $11 billion of debt in the government’s latest attempt to lure investors to the struggling carrier, people with knowledge of the matter said.

Prime Minister Narendra Modi’s administration plans to ask proposed investors to take over $4.2 billion (300 billion rupees) of the airline’s debt, which are backed by the carrier’s aircraft, the people said, asking not to be identified, citing private information. The government may call for the so-called expression of interest as early as December 15, the people said.

Modi’s administration, which failed to attract any bidder for the carrier last year, is keen to sell the company to help bridge a widening fiscal deficit following dismal tax collections and cuts to corporate tax rates worth $20 billion. Last week, the government decided to sell its entire stake in the country’s second-largest state refiner, and its biggest shipping company.

Unprofitable for a decade with taxpayers bailing it out repeatedly, Air India’s appeal to any investor is contingent on the government’s ability to write off the debt not backed by assets. The government has pumped in $7.8 billion (560 billion rupees) in the last past decade in a bid to keep the carrier afloat, the people said.

A spokesman at India’s finance ministry, which handles assets sales, was not immediately available for a comment.

The government will absorb $7 billion (500 billion rupees) worth of obligations, the people said. Air India Assets Holding, a special purpose vehicle, holds about $4.2 billion (300 billion rupees) of the state-owned carrier’s debt and some of its assets, they said.

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Photo Credit: Beleaguered Air India. Bloomberg