AI seeks 10-fold hike in capital in run-up to IPO

NEW DELHI: In an attempt to adequately capitalise the company ahead of its IPO in 2010, Air India has sought a quantum hike in its equity base from Rs 145 crore to Rs 1,500 crore.

The recently integrated National Aviation Company of India (Nacil), formed after the merger of Air India and Indian Airlines, is looking at avenues to increase its financial standing when it goes public.

The airline has the largest number of fixed assets in the Indian aviation industry, along with a combined order for 111 new aircraft estimated at Rs 40,000 crore and an annual turnover of Rs 16,000 crore. It plans to add these new aircraft to its fleet to take it to over 200 aircraft in the next three years.



Air India director (public relations) Jitendra Bhargava confirmed that the airline has asked for additional equity.
���We have sent a proposal to the government to increase the equity base of the airline. With the changes in the newly-integrated entity, we are looking at a new equity structure, which will portray the real financial standing of the airline,��� Mr Bhargava said. An enhanced equity base will give the government more flexibility in terms of equity dilution and fund-raising at the time of the IPO.

SpiceJet, which operates just 18 aircraft, has an equity base of around Rs 700 crore, while Kingfisher Red class (erstwhile Air Deccan) with an operational fleet of 41 aircraft has a much higher equity base.

Air India is expected to get financial assistance from the government amid troubled times which has hit the entire aviation industry. Soaring crude oil prices have led to an additional Rs 1,500 crore burden on Air India���s fuel bill of Rs 6,500 crore . To tide over the crisis it has asked for funds and soft loans from the government, which will be adjusted with additional equity. Besides to improve its bottomline the national carrier has also scrapped all flights on its biggest loss-making routes to Los Angeles, Dar-e-Salaam and Seoul from immediate effect.