Tata, Spicejet now in the fray for Air India

Tata Group and private airline Spicejet remain in the fray for buying Air India as all the other bids have been rejected, according to sources close to the development.

Bids by others have been rejected after the evaluation of the expressions of interest (EoI) where multiple bids were received.

The transaction advisors have been in touch with the interested bidders regarding several queries and the qualified bidders will be intimated only after the government is satisfied with the responses from the bidders.

Apart from Tata Sons and Spicejet, Tata Sons and the New York-based Interups Inc backed by strategic NRI investors from the US and Europe are said to be the interested bidders for the national carrier.

DIPAM Secretary Tuhin Kanta Pandey had earlier said that the government has received multiple expressions of interest for the strategic disinvestment of Air India.

The process has been divided into two stages. In stage one, expressions of interest have been submitted by the interested bidders and they will be shortlisted based on the eligibility criteria and other terms mentioned in the Preliminary Information Memorandum (PIM).

In stage two, the shortlisted interested bidders will be provided with a request for proposal (RFP) and thereafter there will be a transparent bidding process.

A group of 209 employees of Air India had also put in a bid. Essar and Pavan Ruia of Dunlop and Falcon Tyres had also put in bids for Air India.

After several years of heavy financial losses and complaints of poor quality services by passengers, AIR INDIA, the national carrier is likely to return to its original owners, the Tata Group of Companies. Tata Group, who has been in the aviation sector for a long time, has expressed a keen interest in taking over Air India for quite some time now. .

The Tata group has already begun due diligence and is likely to put in a formal bid soon, close to the deadline.  Air India Express, a low-cost subsidiary of the airline and the Air India’s real estate assets; a part of the airline will also be on sale.

Tata sons holds a 51% stake in AirAsia India. Tata Group also has a joint venture in the airline business by the name Vistara.  Thereafter, if the Tata bid is deemed accepted, the 90 day period for handover shall commence and end by November 30 or at the most, by December 31. So, one possible scenario is for Tata to take control of Air India by January 1, 2021.

While the other bidders are not known yet, globally, airlines are under severe stress due to the Covid-19 pandemic and resultant disruption on air travel and tourism. Tata is widely believed to emerge as the sole bidder for Air India and the salt to software conglomerate is likely to place a bid before August 31, the last date for bids for Air India, which the government has repeatedly said it will not be extended. According to reports, the Tata group has already begun due diligence and is likely to put in a formal bid soon.

On the ensuing structure for the airline business, there is speculation that Tata is planning to merge its existing stake in AirAsia with Air India into a single entity. Air India has been passing through a critical financial condition from much before the Covid-19 onslaught. The crippling effect of the pandemic, especially in the aviation sector, has further brought its finances to a precarious position. Recently, its pilots and other employees are on the warpath as Air India has laid off employees and started a Leave Without Pay (LWP) scheme.

From Tata Airlines and Air India to Vistara and AirAsia India, the Tata group has been an important part of the growing aviation sector in India. From Tata Air Lines and the long-since nationalised Air India to strategic joint ventures with AirAsia Berhad and Singapore Airlines (SIA) for AirAsia India and Vistara, respectively, Tata has been present in the aviation sector. The two joint venture airlines operate independently with their respective business models – low-cost (AirAsia) and full-service (Vistara).

 

Air-India began operating in 1932 as Tata Airlines, named after J. R. D. Tata, its founder. The line carried mail and passengers between the Indian cities of Ahmadabad, Bombay, Bellary, and Madras, and Karachi, Pakistan. Within a few years Tata Airlines’ routes included the Indian cities of Trivandrum, Delhi, Colombo (in Sri Lanka), Lahore, and other locations in between.

In 1946, at the conclusion of World War II, the airline became a public company and was renamed Air-India Limited. In just two years, with the government having a 49 percent share in the company, the airline was flying further outside of India, with regular flights to Cairo, Geneva, and London. The line’s name changed again to reflect its new scope of operations, becoming Air-India International Limited. Now, after several decades, the ownership is likely to return to the Tata Group, who had started the airline, now known as AIR INDIA.