Logistics

At least 3 airlines eyeing stake in Air India

Tanya Thomas Rajesh Kurup Mumbai | Updated on January 08, 2018 Published on June 22, 2017

BL23_01_AIRINDIA

At least three aviation companies, besides the Tata group, have shown an interest in acquiring a stake in the beleaguered national carrier Air India.

Sources close to the airline said that initial meetings had taken place with possible buyers, including the Tata group.

“After Finance Minister Arun Jaitley’s interview to Doordarshan News in the last week of May saying the government is open to privatising the airline, three or four possible buyers – including the Tatas – have met with both the Finance Ministry and the Ministry of Civil Aviation,” the source said.

BusinessLine could not independently confirm the names of the other suitors, and is therefore not disclosing their details, but among them are at least two international airlines.

“Nothing definite have emerged from these talks yet,” the source added. “Within the government itself, there are differing views about privatising Air India. We’ll have to wait for the Cabinet meeting next week to see which way the government wants to go.”

While Air India has a 105-strong fleet strength and deep international networks, it comes with aircraft-related debt of ₹20,000 crore and another ₹32,000 crore of working capital debt.

The airline is now running on a ₹30,000-crore bailout package extended by the UPA government in 2012. The NDA government’s policy think-tank NITI Aayog had recommended privatisation of the airline.

If the Tatas were to buy the national carrier, this will be second time the group would be owning the airline. The business house and the airline have a shared history. The carrier was started as Tata Airlines in 1932 by former Tata Sons chairman JRD Tata, which was renamed Air India in 1946 and later nationalised in 1953.

While Tata Sons declined to comment on the possibility of it buying Air India wholly or partially, aviation experts say it would only exercise this option with its current joint venture partner in India for Vistara, Singapore Airlines.

“Domestically, both Air India and Vistara operate in the premium economy segments,” a person aware of Singapore Airlines’ business said.

“So it wouldn’t make sense for the Tatas to acquire Air India and then compete with Vistara in the same market.”

Published on June 22, 2017
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