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India govt to sell 10-20% of Air India, Indian Airlines

Analysis

BOMBAY (XFNews) - The government plans to sell 10 to 20 pct of its stakes in state-owned Air India and Indian Airlines in initial public offerings (IPOs) planned for next year, aimed at financing fleet expansion, the Press Trust of India reported.

"The actual figure will depend upon the recommendation of financial consultants who will be appointed shortly," Civil Aviation Minister Praful Patel told a business conference here, the report said.

Patel said earlier that the IPOs were slated for early 2006.

They are planned to help fund the state-run airlines' expansion requirements

The government recently approved domestic carrier Indian Airlines' plans to buy 43 aircraft from Airbus to update its ageing fleet.

International flag-carrier Air India expects to get the government's approval soon to buy up to 68 jets from Boeing.

"Not only these two airlines, but all other airlines need to have healthy balance sheets before going for expansion. Therefore, we need to enhance the equity base (of Air India and Indian Airlines)," Patel said.

He added that while India's aviation industry has been growing quickly, it is still a long way from achieving maturity in terms of infrastructure, equity capital and flights.

"The objective of my ministry is to spread aviation beyond Mumbai and Delhi," Patel said, noting that the vast bulk of India's 1.0 bln plus population still travels by rail.

"Air traffic in India accounts for 0.5 pct of our population. This figure can easily grow 10 times," he said.
pmc/lh/net

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