Monday, May 03, 2021

Air India Looks to Raise Rs1,200 crore from Real Estate Sales to Trim Debt

Debt-ridden Air India Ltd has planned on selling some of its real estate assets in the country as well as abroad. This move is expected to help the struggling government-owned carrier to raise around Rs1,200 crore in the next two years, said sources close to the matter.

Air India has also obtained the approval of the ministry of civil aviation to sell its properties in Chennai, Coimbatore, and Mumbai.

"Selling real estate properties is one among three plans suggested by the government to turn around the airline. Real estate monetization is critical as it would save at least Rs300 crore in terms of interest as the airline has plans to use these proceeds to settle a part of high-cost loans," a source said, according to Live Mint.

Experts say that Air India's attempt to monetise real estate assets to trim debt and reduce interest costs may prove difficult.

The country's third largest airline is struggling with a huge debt of around Rs40,000 crore as of 31 March and is expected to see a turnaround by 2018-19.

It appears that the company is planning to "raise some rupee bonds" and sell a part of its fleet to reduce debt, besides selling properties in the three cities.

The state-owned airline actually planned to sell properties amounting to ?Rs5,000 crore by March next year, but did not get through because of delays in approval from the concerned authorities.

In January 2013, Air India roped in real estate consultant DTZ International Property Advisors Pvt Ltd to assist it in disposing of some of real estate properties.

03/05/21 Besta Shankar/IBT

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