It is believed that Tata Group, India’s largest conglomerate, submitted a bid for the crippled national carrier, Air India. The way used to file the interest in AI has been discovered to be AirAsia India, where Tata Sons have a large majority stake.
An expression of interest is also expected to be given by a group of 200 Air India staff, the deadline for which is Monday 5 pm. The group appears to have an onboard financial investor. SpiceJet’s Ajay Singh is eyeing AI too but the domestic carrier declined to comment. Unlike May 2018, when the first attempt to sell AI ended with no suitors, there are several interests this time around.
Tata Group is seeking, according to news reports, to persuade its partner, Singapore Airlines, with whom it operates a joint venture—Vistara—to waive the non-compete clause in the Air India tender agreement and to partner the conglomerate in its tender.
According to the latest government correction, qualified institutional bidders, if any, will be invited to start bidding for the airline as of 28 December.
This time around the government plans to divest 100% of its equity stake in Air India Limited, which includes Air India’s 100% stake in AI Express Ltd and 50 percent in Air India SATS Airport Services Private Ltd.
The government has substantially sweetened the selling terms for AI this time. It offered its 100 percent stake in AI and AI Express for sale, instead of 76 percent in the first attempt, and the entire 50 percent it owns in AI-SATS joint venture ground handling. Also on an enterprise value (EV) basis, potential buyers will now bid.
After putting up 76 percent of the airline’s stock two years ago, the government was unable to attract any bid for the national carrier. However, selling the airline this time around maybe a challenge in the midst of the pandemic that has adversely affected the aviation sector.
During fiscal 2021, Indian airlines are set to report net losses of approximately 21,000 crore following a range of travel restrictions in the midst of declining travel appetite due to increasing covid infections and will need additional funding worth about 37,000 crore over FY2021-23 to recover from losses and debt, Icra Limited, a credit rating agency, said in a recent report.
The agency maintains a negative credit outlook on the Indian airline industry, Icra said.