Air India Struggles to Lessen Debt; its Peddar Road Flats to be Sold for Rs 900 million.

Air India
While the share prices of its contemporaries Indigo, Jet and Spice Jet are breaking life time highs, Air India is struggling. Its debt burden is about Rs 40,000 crore. It is surviving on a bailout package approved in 2012. At times Air India is forced to ground its planes because of its inability to pay for spares. 

Trying to stay afloat

Faced with such a huge debt burden apart of interest thereon, the national carrier has been exploring various options to raise money to meet its funding requirements. Earlier, it had mopped up Rs 7000 cr by selling 9 of its planes.

These options also include sale of properties and land parcels. Under the asset monetisation plan, Air India has to mop up Rs 5,000 crore over a 10-year period, starting from 2013-14, in a bid to bridge the widening mismatch in its revenue and expenditure. The asset monetisation plan was approved by the erstwhile  UPA government along with Air India’s turnaround plan by its Cabinet Committee of Economic Affairs in April 2012 with a committed public funding of Rs 30,231 crore, staggered over a period of nine years, with some specific riders.

Today Air India has four premium flats in the Mumbai’s up-market Peddar Road area. Each of these 3-BHK flats has a carpet area of 2,033 sq ft. Air India was looking to sell these flats for the past two years. In August 2013, it had also floated bids for e-auctioning of these four flats. State Bank of India, the country’s largest state-owned lender, is all set to buy the flats from Air India for Rs 90 crore. It will be an all-cash deal.

The legal team of Air India is preparing a draft sale agreement which will then be given to the counterparts from the SBI.
The government recently gave its permission to state-owned Air India to sell the said flats to SBI for about Rs 90 crore as part the airline’s asset monetisation plan. 

SBI is planning to allocate these four flats to its top executives. SBI has already taken two floors in the nearly-empty 22-storey Air India Towers at Nariman Point, which till a few years ago was the headquarters of the national carrier Air India.   

Earlier, Air India hiked the penalty for pilots leaving the airline within five years of joining from Rs 10 lakh to Rs 50 lakh. The move was aimed at checking the mass exodus of pilots and ensuring the cash-strapped Maharaja recovers the cost it incurs on training them. (See To prevent Poaching)

A batch of 25 fresh commercial pilot licence holders (CPL) joining the airline in the coming days will be made to sign a bond and give a bank guarantee that will collectively amount to Rs 50 lakh. 
AI chairman Ashwani Lohani

“We will soon make the combined bank guarantee-cum-bond amount Rs 50 lakh for type-rated pilots who join us and up to Rs 1 crore for non-type rated pilots,” AI chairman Ashwani Lohani told media. “This will be clearly mentioned in our future job ads.” 

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