Tata Sons emerges the top bidder for Air India

Forum Gandhi | Updated on October 01, 2021

Centre may decide by mid-Oct on bids, including from SpiceJet Ajay Singh

Tata Sons has emerged  the top bidder for Air India, raising hopes for a take-off of the salt-to-software giant’s civil aviation ambitions. While the Centre is yet to take a final decision on the bid, multiple sources told BusinessLine that the Tata Group’s offer is higher than that made by SpiceJet promoter Ajay Singh, who had bid in his individual capacity.

“The bids need to be vetted and approved by Home Minister Amit Shah-led panel and so the winner will be announced only after that,” said a top source.

A Tata Sons spokesperson declined to comment on the matter. However, top sources told BusinessLine that the Finance Ministry, the Civil Aviation Ministry and the Department of Investment and Public Asset Management (DIPAM) are working towards making an announcement by October 15.

DIPAM’s clarification

While Bloomberg reported that Tata Sons has won the bidding process, DIPAM clarified that “Media reports indicating approval of financial bids by the Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government’s decision as and when it is taken.”

If the Tatas win the bid, the airline would have come a full circle, as Air India was started by JRD Tata before it was taken over by the government.

Tough task ahead

But aviation industry watchers feel it won’t be easy even for the Tatas to turn around the debt-laden carrier though synergies will emerge with the Group’s companies. Tatas will need to put in thousands of crores in capital to clean up the balance-sheet, pay the airline’s liabilities,  fix the many issues and then grow it to bring it  to a point where it can be a meaningful  global player, they say.

“To be fair, Air India has good assets, infrastructure, slots, and bilateral agreements. If they win the bid, Tatas will get access to the top-notch MRO infrastructure of Air India and its real estate. The Tatas have companies like Tata Engineering, Taj Sats, and IHCL that can benefit with Air India becoming a group entity...  it looks like the Tatas are in the lead right now, and the “prodigal airline returns to its original founders. This will be one of the biggest acquisitions in India,” said Shoubhik Dasgupta, Counsel, Pioneer Legal.

Many questions

However, he added that several questions remain. “How is the acquisition  going to be financed? How will Tatas deal with the massive losses that Air India suffers on a daily basis? What about synergies with Vistara and Air Asia? Do their joint venture partners, Singapore Airlines and Air Asia Limited, have any say as customarily JV partners agree not to  invest in a competing entity, which Air India would be,” Dasgupta said.

Published on October 01, 2021

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