Air India (AI, Mumbai Int'l) will repay all of the debt it owes to lessors, airports, fuel suppliers, and banks by the end of this financial year, in other words by March 31, 2022, an unnamed senior government official has told newspaper the Hindu.

The government sought parliamentary approval on December 3 to transfer INR620.57 billion rupees (USD8.23 billion) to Air India Assets Holding Limited, a special purpose vehicle (SPV) set up in 2019 to lure potential buyers by warehousing the flag carrier’s substantial residual debt, liabilities, and a number of assets.

“Most of Air India’s loans were overdue. One option was to issue government-guaranteed bonds but that could take us several years to make repayments. Where the loans are not yet due, banks would be required to enter into a fresh contract with the SPV, which they may not want to do as it doesn’t house a lot of assets. So the money sought from parliament will help us make all settlements and clean up the airline,” the official said.

The SPV will receive an equity infusion from the government and then proceed to settle all of the outstanding debts by the end of this fiscal year, he added. This does not include the INR153.3 billion (USD2.03 billion) that Air India buyer Tata Sons has agreed to take on.

The INR620.57 billion “is Air India’s debt as of August 31, 2021” after subtracting the debt that Tata will assume from a total of INR773.96 billion (USD10.26 billion), the official explained. However, this does not include an additional figure of excess current liabilities of INR150.83 billion (USD2 billion).

Separately, “officials aware of the matter” told The Economic Times that Tata Sons had shortlisted an expat to lead Air India as chief executive and that it would be largely left to the new CEO to finalise the carrier’s new management team. The conglomerate has reportedly also shortlisted members to reconstitute the board of the newly acquired national carrier as it prepares to officially take over the airline in January 2022.

Aviation experts and members of Tata’s mergers and acquisitions team will populate the new board, and a retired government official will be appointed as an independent director, the sources said. Traditionally, the chairman of Tata Sons - currently Natarajan Chandrasekaran - is chairman of all of the group’s major operating companies and this is likely to be the case also for Talace, the wholly-owned subsidiary housing Air India. Formal announcements on the appointments will be made in January, the officials added.

Air India did not immediately respond to ch-aviation’s request for comment.