IA board approves IPO

Indian Airlines' board has decided in-principle to tap the capital market through a public offer.

The initial public offer would, however, be subject to approval from the government, an IA spokesman said without giving further details.

If the government clearance goes through, it will be for the first time that a national carrier would tap the capital market.

Along with IA, Air-India is also preparing for its IPO in fiscal 2005-06 to fund its fleet acquisition programme and enhance debt-equity ratio.

Civil Aviation Minister Praful Patel had earlier asked the two carriers to start working towards this end.

He had said the two airlines could launch their IPOs in the later part of 2005-06.

While Jet Airways has already sold out its stake in the capital market, low-cost carrier Air Deccan has announced plans to go ahead with its IPO by September 2006.

The IA board also approved financial results for the last fiscal showing profits for the second year running.

As per the revised estimates for 2004-05, the company has shown a net profit of Rs 17.5 crore (Rs 175 million), after suffering loss for three consecutive years between 2000-01 and 2002-03.

The board also approved plans in-principle to lease ten additional A-320 aircraft by September-October this year, the spokesman said.

The IA board also approved formation of a joint venture with Singapore Airport Terminal Services in areas of ground handling, comprising passengers, cargo, ramp and security services at various airports in India.

The JV, which seeks to enhance third party ground handling revenues besides providing high quality self-handling by the IA, would be formed subject to final government approvals, the spokesman said.

Referring to the 2004-05 financial results, he said the airline achieved net profit for the second consecutive year despite a hike of about Rs 400 crore (Rs 4 billion) in the aviation turbine fuel bill.

The fuel bill of the airline rose from the budget estimate of Rs 1445 crore (Rs 14.45 billion) to Rs 1806 crore (Rs 18.06 billion) due to the ATF price hike in the last fiscal.

IA's operating revenue rose from Rs 4650 crore (Rs 46.5 billion) in 2002-03 and budget estimate of Rs 5041 crore (Rs 50.41 billion) to Rs 5246.5 crore (Rs 52.46 billion), while the operating expenses increased to Rs 5193 crore (Rs 51.93 billion) from Rs 4524.7 crore (Rs 45.25 billion) in 2002-03 and budget estimate of Rs 5024.5 crore (Rs 50.24 billion), he said.