Debt ridden Air India: All set to auction more than 60 of its real estate assets
Debt-laden Air India is reportedly auctioning around 60 of its real estate assets, which also includes the unsold assets which the company was unable to sell in the April auction. The auction is an attempt to raise funds and reduce the debt burden of the national carrier.
State-owned auction expert MSTC Ltd will handle the auction. According to a tender document issued by the airline, the last date of bids submission is 30th August.
The properties include a Mumbai’s Pali Hill-based residential building with 14 apartments, an apartment at Mahim, Colaba and Bandra. There are several houses across the nation, including Kolkata, Bengaluru, Nashik, Lonavala, Gwalior, Delhi, etc.
The price of these properties ranges from around Rs 15 lakh to around Rs 8 crore. According to the reports, Air India had sold the only a handful of features out of 56 the company had put up for sale in April.
The Central Government had already approved the monetizing of Air India’s real estate assets worth around Rs 5,000 crore. Till now, Air India has raised around Rs 600 crore from auctions according to the sources. However, the company may find it challenging to find the buyers due to the slowdown of the real estate market.
According to a recent ANAROCK report, the housing absorption fell to 68,000 units in the top seven cities in India in the June quarter from 78,520 in the preceding quarter. As there is a hard time for real estate developers in Mumbai, some experts claimed that Air India might find it difficult to find buyers for its Mumbai property.
Air India is expected for a massive loss during FY19. The company reported a loss of Rs 7,365 in FY18 in contrast to Rs5,337 crore in FY17. The loss fell to 17% the previous year according to the sources. The net debt of the company was Rs 58,351.93 crore in FY2019 from about Rs 55,000 crore in FY18.
An equity infusion of Rs. 30,520.21 crore by the central government was given to the Air India as a part of the government’s 2012 Turn Around Plan for budgetary support to Air India.