Air India defers IPO; will borrow $1 billion to buy 21 Airbus jets

New Delhi: Air India has deferred a planned initial public offering until global financial markets rebound and air travel demand picks up, a senior executive at the state-run airline said Thursday.
India's flag carrier also plans to finalize a $1 billion loan in the next two or three weeks to fund the purchase of 21 Airbus planes, S. Venkat, Air India's executive director in charge of finance, told Dow Jones Newswires in a telephone interview.
"We have to strengthen our balance sheet," he said. "Our cash flow should be good before we go in for an IPO."
A senior finance ministry official, who asked not to be named, had said in August that Air India may complete its IPO by February 2009.
The worldwide credit crunch has made it difficult for airlines, including Air India, to raise funds, even as they struggle to cut costs by deferring delivery of new planes, freezing recruitment and consolidating among themselves. Many airlines worldwide have been hit by falling demand for air travel as the global financial crisis widens.
The benchmark Bombay Stock Exchange's sensitive index plunged 58% since January, in line with falls in other major stock markets. Shares of airline companies such as Jet Airways (India) Ltd. and Kingfisher Airlines Ltd. were among the worst hit as higher fuel prices and fares choked demand in the world's second-fastest growing major economy.
Indian carriers are estimated to post combined losses of $1.5 billion in 2008, the biggest in the world after those of U.S. airlines, the International Air Transport Association said recently.
20/11/08 Santanu Choudhury/MarketWatch

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Categories: NACIL Nov 2008