Air India’s asset monetisation finally gets a push after two years delay

Air India’s asset monetisation plan is seeing some hope after two years delay with the civil aviation ministry sending a Cabinet note on property sale of Rs 250 crore. This sale of land and houses is part of the plan to raise Rs 5,000 crore over a period of three years starting FY 14.

"Cabinet note to sell Air India properties prepared and will soon be sent," said a senior civil aviation ministry official.

The national carrier had a three-year plan to monetise assets worth Rs 5,000 crore by March 2016 — to earn Rs 1,200 crore in FY14, Rs 2,000 crore in FY15 and Rs 1,800 crore in FY16. The decision was to use this money to retire its debt.

However, adverse market conditions and legal issues over title deeds and ownership clauses forced the airline to sign a memorandum of understanding with National Buildings Construction Corporation (NBCC) in December last year.

NBCC will develop and redevelop properties on land owned by Air India on a project-to-project basis. The national carrier is now expecting to monetise assets to the tune of Rs 5,000 crore

This delay is asset monetisation programme has adversely impacted the airline's plan to clear debt of Rs 40,000 crore on its books. The airline's annual interest outgo stands at around Rs 3,800 crore.

Air India had cumulative losses of Rs 36,000 crore on its books till last fiscal. The airline's losses widened to Rs 5,388 crore in 2013-14, against the target of Rs 3,989 crore, primarily on high operational costs.

(Image credits: Indiatimes)