Air India, the embattled national carrier, has finally found the buyer for its iconic sea-facing Mumbai building, a latest media report said on Tuesday. The deal, if materialise, may help the Air India to ease its fund crunch. According to an Indian Express report, the Maharashtra government has offered Rs 1,400 crore to Air India for its Mumbai building. Earlier, the Jawaharlal Nehru Port Trust (JNPT) and the Life Insurance Corporation (LIC) had quoted Rs 1,375 crore and Rs 1,200 crore for the building. The deal is one of its kind with the state buying back the land it had leased out for a commercial activity. It was in 1970 that the then Maharashtra government had leased the building to Air India for 99-year term.
“We have asked Air India to ensure there is no renewal of rental agreements after the expiry of the current period. Due to a paucity of space in Mantralaya, offices of the state secretariat operate from various locations currently. We’re paying high rentals and face efficiency related issues. All these offices can be accommodated in the Air India building,” Maharashtra Chief Secretary UPS Madan was quoted as saying.
However, Air India has not issued any statement regarding the impending deal. The sale of Air India’s 23-storey building at Nariman Point, Mumbai, which was also once the airline’s headquarters, was seen as way for getting more funds. The Air India is currently running with debt of Rs 50,000 crore.
Earlier, speaking about the Air India's woes, Civil Aviation Minister Suresh Prabhu had said that future revenues of the company cannot service its "massive" debt and this legacy issue has to be segregated from the current challenges of national carrier.
"If you feel that future revenues can actually service the debt, it is not possible for the simple reason that the debt is so massive," Prabhu had said during a livestream held on 'Flying for All: Global Aviation Summit 2019'.
Air India earns 65 per cent of its revenues from international routes, while the remaining comes from domestic network. "Also, the cost of interest on the debt, when you try to service it from your revenues, Air India can never be in profit. Therefore, we have to address the debt issue. We are proactively working with the Ministry of Finance to make it happen," Prabhu added.
Air India has been making losses since the merger with Indian Airlines in 2007. The airline has a fleet size of around 122 aircraft currently.