Govt to mull IPO for Air India: Patel

New Delhi, June 1 (PTI) Indian 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
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."

Regarding building of new airports at Navi Mumbai, Pune
and Kannur, Patel said the bidding for selection of developers
"will be over latest by 2011."

On Nagpur airport, he said joint venture firm Maharashtra
Airport Development Corporation was also expected to soon
begin the bidding process, while work was going on to develop
aerotropolis project in Durgapur-Asansol region of West
Bengal.

To questions on further liberalisation of FDI norms in
the aviation sector and allowing foreign airlines to pick
stake in Indian carriers, the Minister said that aviation was
an evolving and dynamic sector.

"We already allow 49 per cent FDI, barring investment by
foreign airlines," he said, but added that "change with
continuity" would be brought about in policies depending on
the evolving needs of the sector. The growth in the aviation
sector necessitated the process of consolidation, he said.

Patel said the Centre would consider rationalisation of
taxes and continue to ask state governments to reduce sales
tax on jet fuel.

Government would also make Airport Economic Regulatory
Authority functional soon and later consider expanding its
scope further. It would also upgrade technology and continue
with the expansion of air traffic management network, among
other things. PTI ARC
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