Air India one step closer to asset monetisation plan

Cash-strapped Air India’s asset restructuring plan is ready to take off as the airline is close to appointing a global property consultant to help it raise over Rs 5,000 crore by selling and leasing its prime properties in India and as well three in Tokyo and London.

According to various media reports, the airline has zeroed in on property consulting firm Jones Lang LaSalle as it has reportedly quoted the lowest fee for its services among the other two bidders DTZ and Cushman and Wakefield to advise the airline on the sale process.

[caption id=“attachment_515832” align=“alignleft” width=“380”]  The move to monetise its assets at an average rate of Rs 500 crore every year for ten years is part of the Financial Restructuring Plan approved by the government.[/caption]

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With a debt pile of over Rs Rs 43,000 crore and accumulated losses of Rs 20,000 crore, Air India has outlined a 10-year programme for monetising its 105 properties measuring around 75 acres in Delhi, Mumbai and Chennai. Of the overseas properties, two are in Tokyo and one in London. The airline hopes to raise Rs 500 crore every year to retire part of its massive debt. Whether the airline will raise this amount through a lease, outright sale, or the development of existing facilities with a new partner, will be decided in consultation with the its adviser in the next six months.

According to a report in the Economic Times, Air India’s iconic headquarters in south Mumbai remains out of this contract, although it has already started the process to lease out around 159,000 sqft space in Air India Building at Mumbai’s central business district of Nariman Point as it moves its headquarters to New Delhi from Mumbai. The airline has already called for bids to lease out some of the 23 floors in its Nariman Point building and hopes to raise around Rs 100 crore per year from leasing.

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Currently, the airline is paying Rs.2.64 crore per year from its own coffers for the upkeep of the centrally air-conditioned structure, said a TOI report.