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Air-India IPO by year-end, says Patel

Minister announces first civil aviation show in Hyderabad from Oct 15-18; to seek reduction in jet fuel prices, reports Samiran Saha.

india Updated: Jan 11, 2008 22:29 IST
Samiran Saha
Samiran Saha
Hindustan Times

State-owned National Aviation Company, which controls national carriers Air India and the former Indian (Airlines), plans to divest some stake through a public issue in the second half of the calendar year, civil aviation minister, Praful Patel said on Friday.

"We may consider issuing an IPO (Initial Public Offering) in the second half of this year," he said after announcing the launch of the nation's first civil aviation air show — India Aviation 2008, scheduled to be held in Hyderabad from October 15 to 18.

While Patel chose not to disclose the quantum of the stake to be divested, airline industry sources indicated that the company could divest anywhere between 10 to 15 per cent of its stake through the proposed IPO.

According to Patel, equity is likely to be divested to enhance the carrier's equity base. He had said earlier that an employee stock option plan (ESOP) would also be considered during the dilution of equity.

The proposed IPO could also help meet the financial commitment for the 111 aircraft that the airline has already placed orders for. The proposed IPO would be considered when merger of erstwhile Air India and India Airlines takes its final shape, sources said.

Both the airlines have jointly ordered 111 aircraft from Boeing and Airbus and may order another 100 after it reviews its fleet strength in 2009, they added.

On rising aviation turbine fuel prices, Patel said he would meet Finance Minster P Chidambaram next week to seek a reduction in custom and aviation duties on ATF. Patel has also asked state governments to slash sales tax on ATF. Jet fuel prices in India are among the world's highest and operators lament that high ATF prices now account for nearly 40 per cent of the total operating costs of airlines.

Patel also stated that the Ministry of Civil Aviation will organise a day-long meeting with the various states governments in New Delhi on January 18 to emphasis on the growth opportunities that exist in the sector.

"The states should look to public-private-partnership model for the development of airports," Patel said.