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Home > Business > PTI > Report

A-I, IA plan IPO in 2005-06

January 28, 2005 15:28 IST
Last Updated: January 28, 2005 16:37 IST

Public sector carriers Air India and Indian Airlines are preparing for their initial public offers by the next fiscal to fund their fleet acquisition programmes and enhance debt-equity ratio.

"We have told the airlines to start working towards that end. It will take some time and the two airlines could launch the IPO in the later part of 2005-06," Civil Aviation Minister Praful Patel said in New Delhi.

Replying to questions on the issue, he said the proceeds of the IPO would be used by the two airlines to finance their fleet expansion plans.

While Jet Airways has already launched its IPO, low-cost carrier Air Deccan has also announced plans to go ahead with its IPO by September 2006.

Asked about the government decision to set up a National Investment Fund out of divestment proceeds, Patel said the fund had "nothing to do with our scheme of things for the IA and A-I... We don't need this (fund) to infuse equity".

"We plan to use the monies raised from the proposed public offerings by these airlines to fund their acquisition plans and improve their debt-equity ratio", he said.

Air India has also started negotiating with banks to help finance the acquisition of 50 new long-range aircraft with deliveries expected to start next year.

The new orders would comprise ultra-long range aircraft, medium capacity long-range 350-seater planes and medium capacity long-range 250-seaters.

The airline has shortlisted three types of long-range aircraft -- the medium capacity Airbus 340-500 or Boeing 777-200 LR, the 350-seat Airbus 340-600 or Boeing 777-300 ER, and the 250-seat Airbus 330-200 or Boeing 7E7s.

Sources said that A-I is likely to come up with firm proposals shortly after techno-economic evaluation on the basis of bids received by it last December.

While two-thirds of the planned purchase will be on firm order basis, one-third would be on lease-purchase option.

Apart from the long-range planes, A-I has also firmed up a plan to acquire 18 short-range aircraft at an estimated cost of $ 1 billion for its proposed low-cost carrier called Air India Express. The budget carrier is expected to make its first flight on March 27.

Meanwhile, Indian Airlines is proceeding with plans to acquire 43 new aircraft at an estimated cost of $2.06 billion and is contemplating adding more planes to operate on short-haul and regional routes.

IA, which has come up with specific plans for more overseas operations, proposes to induct nine wide-bodied aircraft from November 2005 onward to service the new international routes, the sources said.

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