Debt-laden Air India Ltd is making a renewed bid to raise funds by auctioning about 38 real estate assets, including some it could not sell in previous auctions by lowering the reserve price of some of the properties.
Bidders can submit their offers by 15 November, according to a tender document issued by the airline and seen by Mint.
State-owned MSTC Ltd, which specializes in conducting e-auctions, will handle the online auction for Air India. Real estate consultants Cushman & Wakefield is advising the national carrier on the property sales.
The properties on the block include flats at Asian Games Village Complex in New Delhi, flats in Kolkata’s Golf Green area, residential land in Mumbai’s Bandra, Khar and Prabhadevi areas, a holiday home in Lonavala, flats at Chennai’s Besant Nagar, apart from flats in Bengaluru and Mangaluru.
The airline is also offering to sell properties in Nashik, Pune, Gwalior, Thiruvananthapuram and Bhuj in the upcoming auction.
The reserve price of these units range from ₹15 lakh to about ₹8 crore.
However, unlike the past few attempts, Air India has lowered the reserve price of some of these properties, especially those in Tier 1 cities, to attract buyers, a senior Air India official said, requesting anonymity.
The current auctioning lot has several properties, which have been put on sale multiple times previously but failed to attract bidders even at the base price.
“Reserve price of some properties in major cities like New Delhi and Mumbai, among others, have been reduced to attract bids,” the official added.
Air India’s plan to monetize its real estate is part of a turn around plan (TAP), which was approved by the government in 2012.
The airline was then directed to raise ₹500 crore every year from monetizing real estate.
The loss-making airline has however missed this target every year since 2012.
According to another Air India official, the airline has put on sale more than 100 properties worth about ₹9,000 crore – ₹10,000 crore in India and overseas since 2012.
“At present, some 30 properties have been sold while the airline has raised close to ₹1,000 crore from the proceeds of these sales,” the official added.
The government plans to soon invite bids to sell its entire stake in Air India, after potential buyers baulked at an initial attempt last year to divest a partial stake in the airline. The expression of interest (EoI) document for the privatization process is likely to be finalized by November-end, government officials had earlier told Mint.
Air India’s net debt swelled from ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019. This includes working capital and aircraft-related debt.
Selling Air India, which has about 128 planes, will, therefore, help the government exit a loss-making business.
About half of the debt was transferred to a special purpose vehicle (SPV), Air India Asset Holding Ltd (AIAHL), which was set up in January 2018, as part of a financial restructuring plan. The government had transferred debt of ₹29,464 crore, as well as non-core assets, real estate assets, and non-operational assets of Air India to the SPV.
AIAHL has raised about ₹29,000 crore through bond sales to retire a part of its debt, which is expected to make the airline attractive to potential buyers.
Source: Mint