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AAI to Adani: Take over Ahmedabad, Mangaluru, Lucknow airports by November

In one of the most aggressive bids in the sector, Adani Group in late 2018 had won the right to upgrade and operate six AAI-owned airports - Ahmedabad, Lucknow, Jaipur, Guwahati, Thiruvananthapuram and Mangaluru - for 50 years

Nirbhay Kumar | September 7, 2020 | Updated 22:28 IST
AAI to Adani: Take over Ahmedabad, Mangaluru, Lucknow airports by November
For the three airports, Adani Group has to make a total payment of about Rs 1,000 crore (Representative image)

KEY HIGHLIGHTS

  • Adani Group had won the right to upgrade and operate six AAI-owned airports for 50 years in late 2018
  • AAI wants Adani Group to take control of three airports - Ahmedabad, Mangaluru and Lucknow - by November, and the remaining three in the next six months
  • For the three airports, Adani Group has to make a total payment of about Rs 1,000 crore
  • Adani Group won bids for all six airports by quoting highest per passenger fee
  • Business outlook for the airport sector seems bleak due to demand slump in the wake of COVID-19 pandemic

State-run Airports Authority of India (AAI) wants Adani Group to take control of three airports - Ahmedabad, Mangaluru and Lucknow - by November and the remaining three in the next six months.

Speaking to BusinessToday.In, a top official said that the Ahmedabad-based business conglomerate has started depositing money towards performance guarantee and other agreed payments.

"For the three airports, they have to make a total payment of about Rs 1,000 crore but security for the three airports would be about Rs 375 crore. The security amount has been given for two airports and for the third it has to be given. The deadline for this is September 12," the official said.

ALSO READ: Airport foray to lead in aviation infra creation, says Gautam Adani

Adani Enterprises did not respond to an email query on takeover of the airports and payments made so far in accordance with the bid terms.

An industry executive said that it makes a lot of sense for Adani to take control of all the airports as it will provide them scale of operation following the deal to acquire majority stake in the Mumbai International Airport, the busiest airport in the country. He, however, warned that if the current situation continues and business outlook remains negative, the losses would be substantial.

In one of the most aggressive bids in the sector, Adani Group had won the right to upgrade and operate six AAI-owned airports in late 2018 for 50 years. The six airports are Ahmedabad, Lucknow, Jaipur, Guwahati, Thiruvananthapuram and Mangaluru.

The Union Cabinet had approved leasing of three airports, namely Ahmedabad, Lucknow and Mangaluru in July 2019 to Adani Enterprises. The nod for the remaining three was given last month. The delay in case of three airports was attributed to court cases and issues raised by state government.

ALSO READ: Why Adani Group's buyout of Mumbai Airport is surprising?

Adani Enterprises had won the bids for all airports by quoting highest per passenger fee.

While it signed concession agreements with AAI for taking over three airports earlier this year, the company requested the state-run airport agency to delay the transition for six months citing business uncertainty due to the coronavirus pandemic.

"They had requested for six months time but we allowed 3 months. They will take over the three airports in November, the AAI official quoted above said.

AAI had estimated to earn annual revenue of about Rs 1,300 crore from leasing out of six airports. The business environment has, however, changed significantly since then with aviation being one of the worst-affected sectors due to the pandemic.

Meanwhile, AAI has firmed up terms for Rs 2,100 crore loan from Axis Bank to carry out airport development and upgrade works.

"For capex we have been able to pay from past balance and reserves. For future spending we are going to raise loans of Rs 2,100 crore in the current year. It has been finalised and we are going to sign agreement with Axis Bank for the loan," the official said.

ALSO READ: Adani group to acquire GVK ADL's debt; gets controlling stake in Mumbai airport

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