LIC likely to buy Air India property in New Delhi worth Rs 800 crore

Jan 27 2013, 09:42 IST
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SummarySAVIOUR: Deal with state-owned insurer in final stages, would enable airline to turn cash-positive

After bailing the government out on a number of occasions, the Life Insurance Corporation (LIC) is likely to buy Air India’s land in New Delhi that is worth Rs 800 crore.

“LIC has showed interest in the land and they also had a meeting with our chairman, which went well. We have no issues in selling it to LIC as long as the price is around Rs 800 crore, which they have also assured us. The best thing about selling it to a public sector company is that there is no scope for allegations of corruption in such deals,” said a senior Air India official.

The official further said that Air India hopes to close the deal. “The deal would have moved much ahead but the property deed of the land is not available. We have asked the urban development ministry for the land deed, which should come soon. The moment it comes, we should be through with the sale,” the official said.

Sale of this land near the Connaught Place area of New Delhi is crucial, as the money earned from this sale would help the airline in becoming EBIDTA positive.

Sale of property in India and outside to raise Rs 5,000 crore is a crucial component of the airline’s turnaround plan, which also includes infusion of over Rs 30,000 crore over a period of nine years by the government.

In the next financial year, the airline has targeted to raise Rs 500 crore through sale of property that includes employees’ housing colony at Nerul, Navi Mumbai, flats in Mumbai and Hong Kong and property in Chennai, which have been put on fast track for a sale or lease.

Apart from sale, the airline also plans to rent out 16 out of 22 floors in the Air India Building situated at Nariman Point in Mumbai. This is expected to fetch a rent of around Rs 80 crore annually. However, the airline is facing difficulties in getting tenants.

Sahara Group’s proposal to rent all 22 floors of the building was turned down by the airline, as that would have led to changing the name of the building, which is famously known as the Air India building currently.

The other two components required to make the airline cash positive includes renegotiation of contracts with oil firms and the proposed sale and lease back of the six Dreamliners that are currently grounded after a DGCA advisory issued last week.

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