Air India plans JVs as IPO looms

Air India plans JVs as IPO looms
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First Published: Sat, Jan 12 2008. 12 51 AM IST
Updated: Sat, Jan 12 2008. 12 51 AM IST
The Union government may consider selling shares in National Aviation Co. of India Ltd, or Nacil, which runs Air India, in an initial public offering (IPO) in the second half of 2008, even as the state-run firm prepares to select joint venture (JV) partners for a handful of related businesses in a bid to increase revenues.
The proposed float and new ventures are part of the restructuring exercise that the firm is going through after the government merged two of its airlines—Air India and Indian Airlines—into Nacil.
The merger is expected to be completed by the end of fiscal 2009.
“We may consider issuing an IPO in the second half of this year,” said Union aviation minister Praful Patel. He had said earlier that about 10-15% of the merged entity’s equity would likely be sold to enhance the carrier’s equity base.
Meanwhile, the JVs are modelled on German carrier Deutsche Lufthansa AG, which, too, restructured from a state-owned airline with most of its revenues coming from passenger operations to a more diversified portfolio.
Like Lufthansa, Nacil, too, will work under six different business units: domestic and international passenger operations, cargo operations, maintenance and repair work, ground handling services, low-cost carrier, and training.
To bring in specialist expertise, Nacil will partner private groups for three of the above units—in aircraft maintenance, ground handling operations and training—over the next one year.
It has already struck a deal with logistics firm Gati Ltd leasing out five of its freighter aircraft, most of which were converted old aircraft, for cargo operations.
Of the rest, said Air India’s chairman and managing director Vasudevan Thulasidas, the airline is seeking alliances for four dedicated aircraft maintenance centres or firms running MRO (short for maintenance repair and overhaul) operations across the country as also for a ground handling partner.
Thulasidas said the airline will have a controlling stake in all JVs.
“We are hoping to sign the agreements with Boeing and Airbus this month. For engines we have to select somebody; so the request for proposals we will be able to publish this month, components will come a month or two later,” he said.
Two separate MRO units formed with Boeing Co. and Airbus SAS will also “have a third partner, who will be a MRO specialist, a company from abroad”, he added.
Airlines in India together have a fleet of more than 310 aircraft currently, including 140 owned by Air India, with another 480 slated to join over the next five years, creating ample catchment for such maintenance centres.
Boeing’s wholly owned subsidiary Alteon Training has also been selected for creating a JV facility for pilot training in Hyderabad.
“This will be built from scratch because there is land available (in Hyderabad),” said Dinesh A. Keskar, vice-president (sales) of Boeing’s commercial aeroplanes business, adding the facility will also be open for use by private airlines such as Gurgaon-based SpiceJet Ltd eventually.
Nacil is also shortlisting a partner for ground handling operations both in India and abroad.
It already has a tie-up with Singapore Airport Terminal Services Ltd for ground handling at the new airports of Bangalore and Hyderabad that start operations by March.
PTI contributed to this story.
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First Published: Sat, Jan 12 2008. 12 51 AM IST
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