It has suggested that secured loans should be availed against the building.
Mumbai: Air Corporation Employees Union (ACEU) has urged Air India management to reconsider its plans to sell the iconic Air India Tower at city's tony Nariman Point neighbourhood.
Instead, it has suggested that secured loans should be availed against the building, which can be utilised for retiring high-cost working capital borrowings.
The government has started discussions for the sale of the 23-storeyed tower as part of efforts to raise funds for the cash-strapped national carrier. The building, which was the Air India's headquarters till February 2013 before it was vacated as part of the airline's asset-monetisation plans, is considered a primary property. "Air India buildings is an iconic building and holds a great pride...we are being informed that to overcome the difficult situation, Air India building is for sale.
"We would like to inform you that the building generates around Rs 90 crore revenues annually (by way of lease rentals) and has further potential to generate an income of around Rs 120 crore annually by further leasing the available space," ACEU said in a letter to the airline chairman and managing director Monday. Instead, the management can avail a secured loan from financial institutions by hypothication of Air India, which would be at a lower interest rate compared with the high finance cost on working capital loans, the union added.
"The secured loans can be utilised to discharge current borrowings, where Air India is paying high interest," it said. "(Therefore) we call for a re-thinking as the sale of the building will wipe out our presence from the heart of Mumbai and make us history," it added. In March, the civil aviation ministry had informed the Lok Sabha that the airline had mopped up Rs 543.03 crore till then from monetisation of its assets in prime locations such as Mumbai and Chennai.
The monetisation included the sale of six flats at Sterling apartment in the city to the State Bank of India, for about Rs 132 crore, the ministry had said. It had also said the carrier collected Rs 291 crore as lease rental from the Air India building at Nariman Point between April 2012 and January 2018. Air India's debt burden is estimated to be more than Rs 50,000 crore. It has been making losses since the merger with Indian Airlines in 2007. According to its audited accounts, the airline's accumulative losses stood at Rs 47,145.62 crore in 2016-17.
The airline is yet to make public its 2017-18 results. High interest burden, increasing competition, high airport user charges, adverse impact of exchange rate variation and liberalised bilaterals to foreign carriers leading to excess capacity in the market are among the major reasons for the losses, according to the ministry.
The airline is staying afloat on a bailout package extended by the government in 2012, as part of a turnaround plan (TAP) and a financial restructuring plan (FRP). In the current fiscal year, it has received an equity infusion of Rs 650 crore up to June. Last month, the government sought the Parliament's nod for Rs 980 crore as supplementary grants for equity infusion into the airline.