Wednesday, November 27, 2019

Air India land monetisation may generate around Rs 8,000-9,000 crore over 3-4 years

The land monetisation exercise of Air India will not be able to reduce the airline’s debt burden by more than Rs 8,000-Rs 9,000 crore, people aware of the development told CNBC-TV18. The process is also expected to be time-consuming as it is likely to be spread across a period of 3-4 years, sources added.

CNBC-TV18 had reported on November 11, quoting government sources, that the government has accounted for nearly Rs 14,000-15,000 crore from land monetization of Air India and is mulling to waive off the airline’s payables to airports and oil companies.

The proceeds from land monetisation were expected to help in reducing the debt burden of Rs 29,464 crore which has been transferred to a special purpose vehicle called Air India Asset Holding Company but the latest assessment indicates that the relief would not be as expected and not immediate.

The Cabinet Committee on Economic Affairs (CCEA) had approved a financial restructuring and turnaround plan for Air India in 2012. Under this, monetisation of real estate assets in Air India to the tune of Rs 5,000 crore was also approved over a period of 10 years with an annual target of Rs 500 crore from 2012-13 (April-March) onwards. However, as against the annual target of Rs 500 crore, the airline has been able to generate only Rs 700 crore so far by the sale of 37 out of 111 land parcels. These also included five overseas properties in Hong Kong, Tokyo, Nairobi, Mauritius, and London.
The sale of freehold properties has been taking place on state-owned auction site of MSTC. It has been smooth because there was no conflict about ownership of these properties. In a lot of cases, Air India does not have the lease documents and in those cases, it is becoming difficult to sell to a private player so a government-to-government transaction is being worked out for those properties,” a person aware of the development said.
28/11/19 CNBC TV18

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