After a botched attempt to sell the government’s majority stake in Air India, the airline has invited bids for its iconic building at Nariman Point in Mumbai from “state governments and government entities only" for sale of leasehold rights of the land and the building. The last date for submission of the bids is February 5.

Restricting the sale of the Nariman Point building to states and state-owned entities is likely to limit the valuation of the property.

Also Read: Mumbai property rates may weigh on Air India building sale

The United Progressive Alliance had in 2012 approved a bailout package for Air India, known as a 10-year Turnaround Plan/Financial Restructuring Plan (TAP/FRP) for the airline. The TAP/FRP, still under way, envisaged budgetary support of 30,231 crore spread over 10 years till March 2021 as well as equity support for the payment of principal and interest of non-convertible debentures.

As part of the 2012 plan, Air India had received 27,195.21 crore in equity from the government till March 2018, according to an August 9, 2018, statement by Minister of State for Civil Aviation Jayant Sinha in the Lok Sabha. A recent Press Trust of India news report had said that the ministry of civil aviation was in talks with the finance ministry for another bailout for the airline, this one amounting to 11,000 crore.

The airline has identified residential and commercial properties for sale in at least 16 cities. The 2012 turnaround plan for the airline had also set it a target of 5,000 crore from sale of its real estate over 10 years. Till the end of December 2018, Air India had realized only 410 crore from sale of non-core assets in India and abroad and 314 crore in rental income.

According to the Public Enterprises Survey 2017-18 published on the website of the Department of Public Enterprises, the airline posted a standalone net loss of 5,337 crore in the last financial year after posting a loss of 6,281 crore in 2016-17. At the end of the last financial year, it had 21,955 crore in short-term borrowings and 30,227 in long-term loans.

The airline has five subsidiaries, of which only two make profits — Air India Air Transport Services, a ground handling service provider, and Air India Express, a low-cost carrier that mostly operates flights between Kochi and West Asian nations.

Last year, the government had attempted to sell up to a 76% stake in Air India along with its subsidiary Air India Express and Air India SATS Airport Services, a joint venture between the parent company and Singapore’s SATS Ltd.

The exercise came a cropper as not a single entity turned up to bid for the airline, the bundling of a loss-making airline with a profitable one dissuading potential buyers. The parent and its subsidiary cater to a different sets of customers and would attract a varied set of buyers if sold separately. This didn’t happen as the buyer would have had to buy the two companies and Air India’s stake in the joint venture together. The government continues to make efforts to sell the subsidiaries separately.

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