Sahara India's Bid for Air India HQ Rejected
Air India has declined Sahara India's offer to lease its landmark headquarters building at Nariman Point, Mumbai. The cash-strapped airline recently announced its intention to lease or monetize some of its real estate holdings to alleviate its substantial debt burden. The plan involves leasing out 20 floors of the headquarters while retaining the top three floors for its own operations.
Air India's Leasing Strategy
Air India hopes to generate approximately Rs. 50 crore annually by leasing out 1.6 million sq. ft. of space within the tower. The Lucknow-based Sahara group proposed leasing the entire available area for a period of 30 years. However, sources close to Air India revealed that the bid was unacceptable due to the airline's preference for shorter-term leases.
A Sahara spokesperson confirmed the group's bid for the Air India HQ but declined to elaborate on the intended purpose of the lease.
"We want to keep the landmark building in our name itself," a senior Air India officer stated, emphasizing that this stipulation is embedded within the terms and conditions of the lease. It is suggested that Sahara intended to operate a hotel in the building, which further clashed with Air India's short-term leasing plan of 4 to 5 years.
Avoiding the Sears Tower Scenario
Air India is determined to avoid a situation similar to that of the Sears Tower in Chicago, which was renamed Willis Tower after the Willis Group secured naming rights through a long-term lease in 2009.
The Air India official also disclosed that some floors in the headquarters building would be leased within a couple of weeks, with four more floors following shortly thereafter. Various government departments have expressed interest; however, their offers have fallen short of Air India’s expectations.
Investor Interest and Lease Term Reconsideration
Numerous real estate investors have shown interest in the property. However, the short lease terms have deterred many. This concern has been communicated to the Air India board, which is currently contemplating a revision of the lease tenure.
Air India's Debt Situation
According to the latest figures from the aviation ministry, Air India's debt stands at a staggering Rs. 47,226 crore. The airline seeks to raise Rs. 5,000 crore per year through various measures, aiming to eliminate its debt within a decade. This emphasizes Air India's urgent need for a rapid influx of cash.