New Delhi, Mar 1 (IANS): The Union Cabinet here on Thursday approved creation of a special purpose vehicle (SPV) -- Air India Assets Holding Ltd -- for warehousing accumulated working capital loans of the national carrier.

The Cabinet also approved the associated activities for the disinvestment of Air India and its subsidiaries or joint ventures.

According to a statement, the Rs 29,000 crore debt of Air India along with four of its subsidiaries will be transferred to the SPV. Non-core assets like paintings and artefacts and other non-operational assets will also be transferred to the SPV.

The move assumes significance as it will lessen the interest payment obligation of the airline on its total outstanding debt of over Rs 55,000 crore.

"The approval will ease warehousing of Air India's subsidiary companies namely, AIATSL, AIESL, AASL and HCI from Air India to the SPV," the statement said.

"The disinvestment proceeds will be used to set off the working capital loan liability of Air India not backed by any asset also warehoused in the same SPV," it said.