E-Paper
Tatas lead race to acquire Air India
After the first attempt to divest Air India did not attract investors’ interest in 2017, the government launched the disinvestment process again in January 2020.
Tata Sons is the front runner among bidders to acquire the country’s flagship carrier Air India even as the government is working on formalities to declare the conglomerate’s name as the prospective owner of the state-run airline, which was once owned by the Tata group, three people aware of the development said on Friday, requesting anonymity.
One of the people cited above, working in an economic ministry, said while financial bids that opened recently indicated the Tatas as the successful bidder ahead of SpiceJet promoter Ajay Singh, an elaborate evaluation by a ministerial panel was still pending and a formal announcement was unlikely immediately. The panel, Air India Specific Alternative Mechanism (AISAM), is headed by home minister Amit Shah; finance minister Nirmala Sitharaman, civil aviation minister Jyotiraditya Scindia, and commerce minister Piyush Goyal are its members.
The ministries of finance, home and civil aviation did not respond to email queries on the matter. While a Tata group spokesman did not respond to HT’s queries, its external spokesperson declined comment.
A second person said the financial bids had been vetted by the core group of secretaries on disinvestment (CGD) headed by the cabinet secretary this week and the matter will now be considered by the AISAM. “No official announcement can be made before the ministerial group formally approves the name of the winner,” he said.
Tuhin Kanta Pandey, secretary in the department of investment and public asset management (Dipam), said in a tweet: “Media reports indicating approval of financial bids by Government of India in the AI [Air India] disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken.” Dipam is an arm of the Union finance ministry.
Once AISAM gives formal approval to the winning bid by the Tatas, only formalities may be left for the salt-to-software conglomerate to take over control of Air India, founded by JRD Tata in 1932 as Tata Airlines.
“The full handover process may, however, take some time,” a third person said.
After the first attempt to divest Air India did not attract investors’ interest in 2017, the government launched the disinvestment process again in January 2020 and sweetened the deal by reducing the debt burden for the prospective owner as the airline was running into losses after its merger with domestic carrier Indian Airlines in 2007. According to Dipam, the airline had a total debt of ₹60,074 crore as of March 31, 2019 and the successful buyer is expected to absorb about ₹23,286 crore.
The Air India disinvestment process was hit by the Covid-19 pandemic. Financial bids were invited in April 2021 and bidders were asked to submit offers by September 15. The government wants to sell off its entire 100% stake in the company, including 100% stake in Air India Express Ltd (AIXL) and 50% in Air India SATS Airport Services Pvt Ltd (AISATS).
AIXL, a wholly owned subsidiary of Air India, operated a low-cost carrier and is headquartered in Kochi. AISATS is a 50:50 joint venture between AI and SATS Ltd, Singapore. SATS is a leading provider of food solutions and gateway services with over 70 years of ground handling and catering experience.
According to Dipam, AI is one of the most extensive flight service providers in India with network coverage of 98 destinations (56 domestic destinations with around 2,712 departures per week and 42 international destinations with around 450 departures per week) as of November 1, 2019. AI offers 75 additional destinations through its secondary network of code share operations covered under 25 agreements with foreign carriers. During FY2019, AI carried around 22.1 million passengers. The airline has a fleet of 121 aircraft (excluding four B747-400s), mainly comprising Airbus and Boeing planes.
