AAI to raise Rs 300 crore to modernise airports

In dire need of funds to finance modernisation of several airports, the Airports Authority of India (AAI) has invited bids to raise funds to the tune of Rs 300 crore (Rs 3 billion) from the bond market to meet its capital expenditure requirements, its officials said.

"Bids have been issued to the institutional investors. We are raising Rs 300 crore (Rs 3 billion) through private placement. The proceeds will be used to meet our capex requirement," the officials, requesting anonymity, said.

AAI has already approached primary dealers to invest in the bonds which are for a five-year period, they said.

With airlines ordering more aircraft, the capacity of airports have to be enhanced at a fast pace, they said, adding the country needed to at least double the airport and runway capacities to support the major fleet expansion plans announced by Indian airlines.

Air traffic would almost double in the next few years and "we have to upgrade our newly constructed airports as well as the older ones to keep pace with the demand", the officials said, adding that air traffic demand would remain strong during the coming decade.

While IndiGo has placed orders for 180 Airbus aircraft, Air India is likely to start getting deliveries of 27 Boeing 787 Dreamliners it has ordered from the end of this year.

Jet Airways has an order book for 49 planes and SpiceJet last year signed a deal acquire 30 B-737s.

The state-run airports body had last year raised about Rs 550 crore (Rs 5.5 billion) through bank loans but its proposal to issue infrastructure bonds was rejected by the Finance Ministry.

The officials said they would again try to seek approval to raise funds through bonds, otherwise would go for debentures.

Now it has disclosed plans to borrow Rs 900 crore (Rs 9 billion) this year and Rs 800 crore (Rs 8 billion) next year to fund the upgradation of ten 10 non-metro airports out of a total 35.

AAI had last year spent Rs 1,200 crore (Rs 12 billion) on modernising and upgrading non-metro airports, out of its total expenditure of Rs 2,700 crore (Rs 27 billion).