Aig Refutes Being Owned By Airline Co

American International Group (AIG), in response to a query from the Indian government, has clarified it is not owned by any airline company and has less than one per cent of its investible funds parked in airline firms.

The government had queried AIG regarding the involvement of the US financial powerhouse in the proposed airline of Tata Industries. The Indian major had submitted to the government that it had held talks with AIG and the Government of Singapore Investment Corporation (GIC) for equity partnership in the proposed domestic airline.

"The Indian government has sought clarifications from us. We have said on record that we are not owned by an airline firm. We have less than one per cent of our funds invested in airlines companies," AIG vice-chairman, Frank Wisner, told Business Standard in a telephonic conversation from New York.

 

Wisner also clarified that AIG had not given any commitment to invest in the proposed airline. "We are looking at the project. But the question of committing funds does not arise until the project is cleared," he said.

Tata Industries, in an application before the ministry of civil aviation, dated July 6, 1998, had said it was in discussion with AIG and GIC, "which had indicated an in-principle interest".

Further discussion with the two and other foreign institutional investors could be undertaken by Tata Industries only after the government approvals had been received, the letter stated.

The application -- seeking a non-objection certificate from the civil aviation ministry for the proposed airline -- also said Tata Industries planned to enter into a technical services agreement with a foreign airline and "other suitable parties" in accordance with the guidelines of the directorate general of civil aviation (DGCA).

The proposal will be taken up by the Foreign Investment Promotion Board on Monday. The FIPB had last taken up the proposal at its meeting on July 11, but deferred a decision for four weeks on the request of the civil aviation ministry. The ministry had said it needed time to evaluate the proposal.

A week earlier, on July 4, the civil aviation ministry had written to the Tatas asking for details of the shareholders and directors of the foreign institutional investors investing in the airline. The Tatas replied that no FII would commit to taking shares until the project had received government approval. The ministry had also sought details of the technical services tie-up proposed with Singapore International Airlines, which initially was slated to be an equity partner until the government came out with a policy laying down that no foreign airline would be allowed to pick equity in a domestic carrier.

In reply, Tata Industries said the scope of the technical services proposed by SIA had already been provided to the ministry and was in keeping with the guidelines.