The Indian government has accepted that it will not be able to sell Air India as a going concern if it insists on the debt being taken on as part of the deal. The Government will therefore place the debt into a “Special Purpose Vehicle”.
While this may sound like a mobility scooter, its in fact a black hole where the debt will sit forever, slowly diminishing like a piece of radioactive half-life over eons, as it devalues from inflation, eventually being paid off once it reaches a meaningless amount by some future government.
The consequences are that Air India instantly becomes vastly more attractive as an investment, though the debt levels are indicative of bad management and poor practice. Any investor will have to face institutional inefficiencies that will be hard to resolve.
Having wiped out all of the airlines debt, other than what it owes for aircraft and leasing costs, interest in it is expected to spike.
IndiGo, Singapore Airlines and others have all suggested they’d be interested in taking the airline over/investing at diffrent points. Even Lufthansa may get involved as it sees Air India and Delhi as hub partnership option for central and SE Asia, and Australasia instead of Dubai.