New Delhi, June 01: Government will consider bringing out an Initial Public Offer to infuse funds in Air India, but the exercise will not dilute the carrier's public sector character, Civil Aviation Minister Praful Patel said on Monday.
Taking charge of the Ministry for the second consecutive term of five years, he also made it clear that there would be no further privatisation of airports in the country, although the private sector could invest in this infrastructure area through the greenfield route.
With airlines in India accounting for almost one-third of global industry losses, Patel cautioned the cash-strapped industry against going for "reckless expansion and avoid financial misadventure in these testing times." Air India had earlier proposed to the government for additional equity infusion of Rs 1,231 crore and a soft loan worth Rs 2,750 crore. On infusion of funds in the national carrier to cover its ambitious fleet expansion programme, he said depending on the stock market situation, "the IPO for Air India will be considered.
But the airline will not lose its public sector character and it will not be privatised." He gave the examples of SBI, LIC, ONGC and IOC which have gone in for equity infusion without losing their state-owned character, but declined to give a time-frame for issuance of the IPO.Air India, which has placed orders for 111 new planes worth over Rs 45,000 crore, currently has a paid-up capital of Rs 1,450 crore with an authorised capital of Rs 1,500 crore. Its total losses for FY'09 are estimated around Rs 4,000 crore, up from Rs 2,226 crore in the previous year.
The unfavourable debt-equity ratio forced Air India, which was earlier merged with sister carrier Indian Airlines, to seek urgent infusion of funds. Patel, however, said the idea of IPO was "one area of intent ... it will bring in much-needed liquidity infusion and also accountability" to the airline. "We will try to get AI the money from the government that has been promised, but I can't speak on behalf of the Finance Ministry and neither can I comment on the (impending) Budget," he said in reply to a spate of questions. Regarding upgradation and modernisation of airport and related infrastructure, the Minister made it clear that no more existing airports, operated by the Airports Authority of India, would be divested or privatised.
"We are not going to go for any more disinvestment or take the PPP (private-public partnership) route for any more airports." Noting that AAI was already developing two major airports of Kolkata and Chennai, he said, "We want to let AAI have a good level-playing field. They are also developing major airports at Amritsar and Ahmedabad, besides the non-metro airports."
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