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Wednesday, Feb 13, 2002

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Industry & Economy - Disinvestment

Air India draws up plans to utilise HCI proceeds

Ashwini Phadnis

NEW DELHI, Feb. 12

AIR India, which hopes to record a profit of more than Rs 21 crore during 2001-02, proposes to utilise the funds from the disinvestment of Hotel Corporation of India (HCI) for product upgrade, information technology, repayment of working capital loans and funding a voluntary retirement scheme (VRS).

Senior AI officials told Business Line that the airline would like to improve its "operating efficiency and marketing.''

Though the HCI disinvestment process has started, it is still unclear as to when the entire proceeds would be made available to AI.

The airline has indicated that upgradation of seats, upholstery and in-flight entertainment systems would be a part of the product improvement process likely to be undertaken from the proceeds of the HCI disinvestment.

"The decision to go in for product upgrade will help the airline get better yield per passenger,'' the officials said.

Besides, the airline will also look at funding a VRS plan, which should help reduce manpower and costs, from a portion of the proceeds.

AI is likely to get more than Rs 200 crore from the disinvestments, with the Juhu Centaur alone attracting a bid of Rs 153 crore.

Similarly, Mr R.L. Batra's bid of Rs 83 crore for the Airport Centaur in Mumbai has also been accepted by the Government.

HCI, which owns and operates five hotels under the Centaur brand in Mumbai, Delhi, Srinagar and Rajgir, is a fully-owned subsidiary of AI.

Meanwhile, the proposed decision to launch a twice-a-week flight on the Kolkata-Guwahati-Bangkok sector from April is meeting with resistance from a section of the airline.

Sources indicated that the airline would find it difficult to get regular passenger traffic on the sector, especially when non-stop direct flights are available between Kolkata and Bangkok.

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