Air India Plans to Put Foreign Assets on the Block to Rake in Resources
After drawing up plans to sell, lease and rent out prime location office spaces of their properties in several cities in India, state run carrier, Air India, is now mulling over proposals to sell their properties in foreign locations to rake in resources.
The cash-starved carrier has come up with new plans and proposals in their effort of asset monetisation, it was reported.
Agencies reported that properties in locations such as Hong Kong, Nairobi and Mauritius could be sold to garner resources. AI has plans to raise Rs 5,000 crore over a period of 10 years with an annual target of `500 crore from FY14.
In February 2014, the Union Government announced an equity fund infusion of Rs 5,500 crore for Fy15 in the Interim Budget, but the ‘never-ending’ fund requirement of the carrier has come from the taxpayers pocket.
Reportedly, the carrier has approached Indian High Commissions’ help to find suitable buyers for these properties. “With bloated staff numbers, increasing debt servicing burden, and a multitude of rivals, AI continues to face a bumpy ride in its efforts to improve its fortunes. Operating costs have risen sharply with higher fuel prices and weaker rupee against the dollar,” Dhiraj Mathur, Aviation Analyst with research and advisory firm PricewaterhouseCoopers told Express.
Mathur forecast losses of $700 million for the national carrier in Fy14.
He added that bank loans and other debts of the carrier were in the range of Rs 300 billion, which (approximately) is twice all carriers in India combined.
Other attempts to garner resources include their proposal to lease out 12 A-320 aircraft. Earlier in April, public sector lender Bank of India extended a $200 million loan to AI for purchase of three Boeing 787 Dreamliner aircraft. The debt laden carrier, which is contemplating seeking cash compensation for the earlier grounding of their existing Dreamliner aircraft, is reportedly planning to raise $500 million in the current fiscal through bridge loans to finance five Dreamliners, it was reported. AI’s mismanagement over the years has resulted in proposals of privatisation of the carrier. “Privatization of Air India can prove to be a viable option if there is political consensus. The delay in deciding the fate of Air India has brought the airline to the edge of a financial disaster,” Mathur said.
The ailing carrier is aiming to rake in passenger revenues of `16,400 crore and ` 21,300 crore operating revenues in the upcoming fiscal. AI saw passenger revenues of `14,300 crore and `19,200 crore operating revenue in 2013-14.