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Sept. 30 (Bloomberg) -- Air India Ltd., the state-owned carrier struggling with losses, plans to raise 100 billion rupees ($2 billion) selling bonds as it works to reduce dependence on government bailouts.
The bond sale is part of a turnaround plan the airline has submitted to the government, Vayalar Ravi, India’s civil aviation minister, said in an interview in his New Delhi office on Sept. 28. The government hasn’t yet decided on giving sovereign guarantee for the bonds, he said without specifying a timeframe for the sale.
Air India is also aiming to “monetize” its land and buildings by renting them out to other government offices in a bid to generate cash, Ravi said. The carrier, which has reported annual losses every year since a merger with Indian Airlines in 2007, has piled up 442 billion rupees of debt after ordering 111 planes from Airbus SAS and Boeing Co.
“It’s a balance between commercial business interest and debt burden,” Ravi said. “Commercial business interest needs to be looked into by Air India.”
The minister said Air India’s board is yet to submit its recommendation on the Boeing 787 Dreamliner to the government. The carrier has ordered 27 of the jets, and is due to get the first one in the fourth quarter after more than three years of delay.
Air India had a domestic market share of 17.4 percent in August as rivals Jet Airways (India) Ltd. and discount carrier IndiGo lured customers. Mumbai-based Jet Airways had a market share of 26.3 percent while IndiGo had 18.8 percent, according to data from the aviation ministry.
Air India has got 32 billion rupees from government since April 2009 to help pay salaries and maintain services. The carrier is asking for 175 billion rupees from the state as it is losing 260 million rupees a day.
In August, the government also helped the airline secure jet fuel on credit from state-run refiners for as many as three months to help ease a cash shortage.
--Editors: Vipin Nair, Arijit Ghosh
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