New Delhi, March 31
THE board of directors of Indian Airlines has given in-principal approval for the national carrier to tap the capital market.
This would enable the airline fund its fleet acquisition as well as improve its debt-equity ratio. However, the IPO would be subject to Government approval.
Officials in Indian Airlines did not give details of the IPO. However, with this decision, the airlines industry is expected to witness a spate of public offers. Jet Airways recently listed on the stock exchanges by offloading 20 per cent equity, while low-cost airlines, Air Deccan has also said that it will tap the capital market by September next year.
The Civil Aviation Minister, Mr Praful Patel, had earlier said that Air India too would go-ahead for an IPO.
Along with this, the board on Thursday also gave its nod for the formation of a joint venture with Singapore Airport Terminal Services for ground handling of passengers, cargo, ramp and security services at various airports across the country.
It has also decided to lease 10 more A-320 planes from winter 2005 in order to handle both domestic as well as international services.
The domestic air market has shown a 25 per cent growth while the international traffic too has shown a growth of around 18 per cent.
The board also approved the revised revenue and expenditure estimates for 2004-05 and the budget estimates for 2005-06. According to this, the company is expected to garner net profit of Rs 17.5 crore in 2004-05 as against a budgeted net loss of Rs 24.75 crore.
However, this is lower than the Rs 44.17-crore net profit recorded the previous year. The dip has been mainly due to the 30 per cent increase in ATF prices. The expenditure on ATF, which was budgeted at Rs 1,445 crore, is expected to go up to Rs 1,806 crore.
The operating revenue has increased to Rs 5,246.50 crore in 2004-05 compared with Rs 4,649.80 crore recorded the previous year.
Operating expenses have also gone up to Rs 5,193 crore, from Rs 4,524.70 crore for 2003-04.