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Tata Sons, SpiceJet bid for Air India

Thursday, 16 September 2021 | Rajesh Kumar | New Delhi

If Tata wins, AI will return to it after 67 years

Tata Sons and SpiceJet’s Ajay Singh have emerged as bidders for the Air India disinvestment on the last day for putting in the financial bid on Wednesday.

If Tata buys Air India, the history will come full circle and this will mark the return of the airline to a group after 67 years which had built and nurtured it into one of the world’s finest airlines until grasping and sloppy Governments ran it into the ground.

Taking to Twitter, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the disinvestment process now moves to the concluding stage. “Financial bids for Air India disinvestment received by Transaction Adviser. Process now moves to concluding stage,” Pandey tweeted.

The financial bids will be evaluated against an undisclosed reserve price and the bid offering the highest price above that benchmark would be accepted. The bid will be initially examined by the transaction adviser before the recommendation is sent to the Cabinet for approval. 

According to reports, a Tata Sons spokesperson has confirmed that Tatas have submitted a financial bid for Air India. Though Tata Sons have confirmed their participation in the financial bid, sources said the promoter of domestic carrier SpiceJet, Ajay Singh, also reported to have placed the bids for Air India disinvestment. Tata Group was among the multiple entities that had put in initial expression of interest (EoI) in December 2020 for buying the Maharaja.

 Tata, who founded Air India in 1932, is seen among the front-runners for getting the airline back. The Government nationalised the airline in 1953. Tatas operate a premier full-service carrier, Vistara, in partnership with Singapore Airlines.

Earlier in September, Civil Aviation Minister Jyotiraditya Scindia had confirmed that the deadline for financial bids for Air India will remain September 15. The strategic sale of Air India was approved by the Cabinet committee on Economic Affairs in February 2019. The Covid-19 pandemic had delayed the proposed sale of the airline.

So far, only the two bids have been made for the airlines with Tata Group being the frontrunner in the Centre’s divestment plan. This is the third attempt of the government to divest its stake in Air India after 2001 and 2017. The Tata Group was also at the forefront of buying a stake in the national carrier when the Government decided to sell its stake in 2001 and 2017 respectively.

The Government has been trying to find a buyer for Air India and earlier the Government was up for selling a 76 per cent stake. Now, the Centre is selling 100 per cent stake of Air India, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 percent in Air India SATS Airport Services Private Ltd.

The stake sale process which begun on January 2020, faced delays due to the Covid-19 pandemic. In April 2021, the Government asked potential bidders to put in financial bids.

As per the Air India EoI floated by the Department of Investment and Public Asset Management (DIPAM) in January 2020, of the airline’s total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore. The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle. 

Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007. Currently, the airline controls over 4,400 domestic and 1,800 international landing and parking slots at domestic airports as well as 900 slots abroad. Currently, Air India has a debt of around Rs 43,000 crore of which Rs 22,000 crore will also be transferred to the Air India Asset Holding Limited (AIAHL). Besides, the bidder would get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.

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