Debt-ridden Air India puts its iconic Mumbai building on sale
In a fresh bid to generate funds, loss-making national carrier Air India has put on sale its iconic eponymous 23-storey building in Mumbai’s posh Nariman Point, hoping to mop up nearly Rs 2000 crore, an Air India official, familiar with the matter, said.
The latest move is part of the airline’s plans to monetise its real estate assets and come less than a month after it invited bids for over 70 residential and commercial properties spread across the country.
The national carrier has issued tender inviting bids for the building, which also happens to be the airline’s erstwhile headquarters. However, only government entities are eligible to participate in the bidding process.
“Air India will retain approximately 5000 square feet of carpet area on 22nd floor for its office use. It will also retain the logo on the top of the building and will maintain it. Also, the buyer can’t change the name of the building and it will continue to be called ‘Air India building’,” said another airline official.
Last date for submission of bids is December 31 and Air India is selling the leasehold rights of the land.
“Air India has taken the land on lease from Maharashtra government. The airline constructed G+22 stories building with two basements in 1970. Seventeen floors in tower block and part of ground floor area is leased out to various government offices like Bank of India, India Tourism, Income Tax, Service Tax and TCS. The airlines is getting annual rental of ?107 crore from this,” the second official quoted above said.
According to the first official, the money generated through sale will go to the special purpose vehicle (SPV) — Air India Assets Holding Limited — formed by the civil aviation ministry.
The government has also decided to transfer Rs 29,000 crore of the total Rs 55,000 crore debt of Air India to the SPV that has also been tasked with raising money through land deals and other measure.
Once the debt is transferred, the national carrier’s annual interest liabilities will reduce to nearly Rs 1700 crore per annum as against Rs 4400 crore that it is paying currently.
The government has already made it clear that if Air India wants financial assistance, it will have to cut costs and enhance its revenue.
“We are not very happy that the iconic building is being put on sale. What’s heartening is that the government has recognized the value of this landmark and therefore decided to ensure that the new owner retains the name and logo of this iconic building as Air India employees are emotionally attached to it,” said Jitender Bhargava, former executive director, Air India.