Air India To Put Assets Overseas On The Block

Sunday, 27th April 2014 at 05:30am

The cash-trapped state-owned airline has been on the red for almost a decade since it merged with another state-owned carrier in 2007.

With its financial resources dwindling by the day due to stiff competition at home, it is looking at putting its assets overseas to raise much-needed funds to partly pay off its mounting debts as well as for its operational expenses.

Some of the properties overseas that they plan to put on the auction block are found in Hong Kong, Mauritius and Nairobi, Kenya.

The troubled airline has already started to talk to several financial institutions and the public sector at home to help ease its financial burdens by putting some of its prime assets on sale. The airline is in dire need of cash to continue its operations for more years.

The government bailed out Air India a few years earlier giving the airline a new lease in life. The airline's misery, according to its officials, is mainly due to stiff competition from low-cost carriers as well as other factors such as the skyrocketing fuel prices and low demand.

The airline is aiming at raising a total of about Rs5,000 crore between now and 2024 targeting an annual proceeds of Rs500 crore over a 10-year period.

The carrier has revealed that some of its properties in Mumbai and Delhi are already earning some cash through lease or sale. In fact it has been renting out its office building that it vacated in Mumbai over two years ago.

Other possible sources of revenue are to lease out spaces in some of its offices across the country to banks for their ATM outlets. They are also planning to lease out more of their company-owned buildings in major cities across the country such as Delhi and Mumbai.

The airline official also hinted to enhance its revenue through web sales in order to reduce its expenses on distribution and marketing. Its web sales, at present, contribute a measly 20% of its total sales. To attract customers to book tickets online they offer discounts for each booked ticket especially on international sectors.

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