AI to enter market by year end

  • Nina Mehta, PTI
  • |
  • Updated: Jun 17, 2005 21:44 IST

Air-India has decided to come out with an IPO? How much stake will the airline dilute and what will the funds be used for?
We are shortly going to appoint an advisor to help us decide the amount of stake to be diluted. The airline’s assets will also have to be revalued and a decision has to be taken on the ESOPs. Then we will send the proposal to the government. After getting an approval we will enter the market, hopefully by the yearend.

The funds raised from the offer will be utilized for fleet acquisition. Unless we are able to increase capacity by buying more aircraft we will not be able to increase our market share (currently at 20 per cent).

The aircraft leasing rates are firming up. Does that affect the airline’s plan to lease planes?
Even earlier it was difficult to acquire aircraft. We have a leasing schedule for the current year and the next year. After that we hope to buy our own aircraft. By July this year two A310s would have joined the fleet. We are in the market for more planes next year but unfortunately nothing is available.

Air-India Express will induct six aircraft next year. Since its pre-PIB clearance has been obtained, we hope that we can place an order for the aircraft soon.

Air-India has to hive off its ground handling and engineering divisions into separate joint ventures. By when will it happen?
Work is already on for inviting a joint venture partner for the ground handling unit which will be done through a tender process. However, for the engineering division we have to set the ball rolling.

We also hope that we will be able to use the countertrade provisions in our deal with Boeing to our advantage. Air-India could get business for the engineering division from Boeing, subject to our discussions with the aircraft manufacturer. We could also get business by the way of providing flight training.

Recently, meetings have been held to synergize the operations of Air-India with Indian Airlines. Have they been conclusive?
The government would like to synergize operations of the two companies. Since many activities of the two airlines are the same it is possible to achieve synergy, but this is being done in a limited manner.

The other way is to merge them. I believe, this will be good for the companies and the country. Moreover, it will help us take on competition head-on.

The liberal air services agreement coupled with domestic carriers flying abroad has led to increase in competition. How will it affect Air-India?Competition from foreign airlines is not a new phenomenon. However, domestic carriers have taken to international skies only recently and on the western sectors there is only one airline. In the future, these airlines will have more aircraft and will mount more flights.

This is helping us grow too. We are gearing up, there has been a lot of support from the government and we hope we will be able to increase capacity to meet competition.


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