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New Delhi: Tata Sons – the holding company of India’s largest conglomerate – on Wednesday submitted a financial bid to acquire loss-making state airline Air India.
Tuhin Kanta Pandey, secretary of the department that is running the privatization process, tweeted about the receipt of financial “bids”, but did not say how many companies were in the fray.
A Tata Sons spokesperson confirmed to PTI that the group has bid for the national carrier.
Ajay Singh of no-frills airline SpiceJet was considered another interested party to buy the debt-ridden airline. He did not respond to messages seeking confirmation if he had bid in his personal capacity.
Financial bids will be evaluated on the basis of an undisclosed reserve price and bids that offer a price higher than that benchmark will be accepted. The bid will be initially scrutinized by the Transaction Adviser before the proposal is sent to the cabinet for approval.
If successful, it will be Air India’s return to the Tata fold after 67 years.
The Tata group established Air India as Tata Airlines in October 1932. The government nationalized the airline in 1953.
Tata operates a major full-service carrier, Vistara, in partnership with Singapore Airlines. It was not immediately known whether the group had placed the bid on its own or through budget carrier AirAsia India.
Singapore Airlines is said to have been unwilling to participate in the privatization program as it would only aggravate Vistara and its own financial troubles.
“Financial Bids for Air India Disinvestment received by Transaction Advisor. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), tweeted, “The process has now entered the final stage.
He neither identified the bidders nor stated how many bids had been received.
In the past, when more than one bid was received. As was the case when the Initial Expression of Interest (EoI) came in for Air India, he tweeted about “multiple bids” coming in. The phrase ‘multiple bids’ was also used when three firms, including the Vedanta group, made investments. EOI for Bharat Petroleum Corp Ltd (BPCL).
The government is seeking to sell its 100 per cent stake in the state-owned national airline, including Air India’s 100 per cent stake in AI Express Ltd and 50 per cent stake in Air India SATS Airport Services Pvt Ltd.
The stake sale process, which began in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to make financial bids.
Wednesday (15 September) was the last day for financial bidding.
The Tata Group was among several entities that had given an initial expression of interest in December 2020 to buy the Maharaja.
The government had in October last year sweetened the EOI clause relating to transfer of Air India’s debt to a new investor, after previous attempts since 2017 failed to generate any significant interest and received feedback from potential investors, Thereby giving flexibility to the bidders to take decisions. Huge amount of debt that they want to absorb.
According to the Air India EOI issued by DIPAM in January 2020, of the airline’s total debt of Rs 60,074 crore as on March 31, 2019, the buyer would need to absorb Rs 23,286.5 crore. The rest will be transferred to Air India Assets Holding Limited (AIAHL), a special purpose vehicle.
Air India has been making losses since its merger with domestic operator Indian Airlines in 2007.
The airline will give control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports as well as 900 slots at foreign airports to the successful bidder.
In addition, the bidder will get 100 per cent of the low-cost Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.
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