Tata Sons, the holding company of India’s largest business conglomerate Tata Group, and budget airline SpiceJet chief Ajay Singh were among those who submitted financial bids for the acquisition of loss-making state-run Air India. Were. Tuhin Kant Pandey, the secretary of the department that conducts the disinvestment process, tweeted about the receipt of financial ‘bids’, but did not say how many companies have submitted bids. A Tata Sons spokesperson confirmed that the group has submitted a bid for the national carrier.
SpiceJet Chairman and Managing Director Ajay Singh has submitted a bid in his personal capacity to buy the debt-ridden airline, sources said. Another source said that several financial bids have been received for the airline. At present, there is no specific information about the bids.
Financial bids will be evaluated on the basis of an undisclosed reserve price and the bid offering a price higher than that standard will be approved. The Transaction Advisor will initially review the bids before sending the recommendation to the Union Cabinet for approval.
Tata will return to Air India after 67 years
If Tata’s bid is successful, it will be Tata’s return to Air India after 67 years. The Tata group established Tata Airlines in October 1932, which was later renamed Air India. The government nationalized the airline in 1953.
Tata Group is running Vistara
Tata operates a premium airline Vistara in partnership with Singapore Airlines. However, it is not known whether the group has placed the bid on its own or through budget airline AirAsia India. AirAsia India Tata Sons and Malaysia’s AirAsia Investment Ltd. is a joint venture.
According to reports, Singapore Airlines was not inclined to participate in the disinvestment program as it would only lead to expansion and its own financial problems.
Financial bids received for Air India disinvestment
Tuhin Kant Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), wrote on Twitter, “The transaction advisor has received financial bids for the disinvestment of Air India. The process is now in the final stage. He neither gave the information of the bidders nor did it tell how many bids have been received.
Government will sell 100% stake
The central government wants to sell its 100 percent stake in the state-owned airline, which includes Air India’s 100 percent stake in AI Express Limited and 50 percent stake in Air India SATS Airport Services Private Limited.
The process of disinvestment started in January 2020
The process of disinvestment which started from January 2020 has been delayed due to the COVID-19 pandemic. The government had asked prospective bidders to submit financial bids in April, 2021. September 15 was the last day for submission of bids. The Tata group was among the entities that had given an initial expression of interest (EoI) in December 2020 to buy the airline.
Since 2017, after previous attempts failed to garner any significant interest and received feedback from potential investors, the government in October last year relaxed the EoI norms relating to transfer of Air India loans to a new investor Was. This gave the bidders the flexibility to decide the size of the huge loan they wish to undertake.
According to Air India’s EOI issued by DIPAM in January, 2020, out of the airline’s total loan of Rs 60,074 crore as on March 31, 2019, the buyer will have to take responsibility for a loan of Rs 23,286.5 crore. The rest of the loan will be transferred to Air India Assets Holding Limited (AIAHL), which is a Specialized Entity (SPV).
Air India has been making losses since 2007
Air India has been making losses since its merger with the domestic airline Indian Airlines in 2007. The successful bidder for the airline will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports as well as 900 slots at foreign airports.
In addition, the company will get 100 per cent ownership of the airline’s low-cost service Air India Express and 50 per cent of AISATS. AISATS provides cargo and ground handling services at major Indian airports.
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