Cash-starved national carrier Air India is set to seal a real estate deal with State Bank of India, which has “in principle” agreed to acquire four of its posh residential properties in south Mumbai for Rs 90 crore.
The airline had been scouting for a buyer for its four tony flats on the Sterling Apartments on the upmarket Peddar Road in south Mumbai for the last two years, AI sources said.
Its efforts in 2013 to sell these through e-auctions did not elicit good response. So were its attempts to lease out its iconic previous headquarters in the Nariman Point area of the megapolis.
SBI Estate Manager was not available for comments.
In August 2013, the national airline had floated bids for e-auctioning of these four flats. Each of these 3-BHK flats measures 2,033 sqft in carpet area.
The deal has been facilitated as the airline has a working capital loan from SBI and it has agreed to retire the same, according to sources.
“The deal is expected to be in place by this month,” sources close to the development said.
“Senior Air India officials held a meeting with the SBI management last week toÂ discuss the sale, which should be finalised in the next couple of weeks,” the sources said.
As part of its Rs 5,000 crore land monetisation programme, the national carrier had decided to put on block these flats, along with some other properties, through an e-auction in August 2013, which did not elicit good response.
“We did not get the desired results from the e-auction,” the airline sources said.
Under the land monetisation plan, Air India plans to mop up Rs 5,000 crore over a 10-year period in its bid to bridge the widening mismatch in its revenue and expenditure.
Surviving on the previous UPA dispensation’s largesse, — a Rs 30,000 crore bailout package beginning FY-13 through FY- 22 — the accumulated loss of Air India stands at Rs 38,000 crore, besides a debt pile of Rs 40,000 crore.
“We have some working capital borrowings from SBI, besides long-term loans. The funds raised from the sale proceeds will help reduce this working capital loan from, SBI besides reducing the interest outgo,” the sources said.