Tata in talks with Singapore Airlines to bid jointly in Air India, says report

Tata Sons is negotiating the waiver of a non-compete clause with its joint-venture partner firm, Singapore Airlines (SIA), to bid for Air India, as per media reports.

Tata plans to bid together with SIA as partners, in which case the bid will take place through Vistara. However, it is prepared to go solo too in the event that SIA does not agree to the plans, reported the Economic Times.

The non-compete clause with SIA prevents Tata from bidding for Air India, as according to the clause only Vistara has an exclusive right to undertake “full-service carrier” services within the overall aviation business of the Tata Group. Consequently, bidding for Air India would lead to violation of this agreement unless SIA agrees to waiver.

Please note that Vistara and Air India are direct competitors, which is why it might be difficult for SIA to give in. Further weighing in the misgivings Temasek — the investment firm with 55 percent stake in SIA — has voiced about the bidding, the consent might not come as easily.

Tata Group plans to go ahead with their bid regardless of the fallout in their joint venture with SIA. The group started evaluating the bid back in April with top consultants and law firms, and due diligence is underway.

Post acquiring the group, the conglomerate intends to consolidate all its airline businesses into one. Chandrasekaran, the group Chairman has stated all the airline business be consolidated into one, a group director said.

The government, on the other hand, is pretty keen on Tata taking over the bid. Centre has promised its full support post the conclusion of privatization procedures, in case Tata wins the bid.

It is noteworthy that Centre has postponed bidding on Air India four times already this year in the wake of the COVID-19 pandemic.

Meanwhile, the deal between Tata Group and India's largest e-grocers, Bigbasket, is in the last lap. The Tata Group is set to acquire a majority stake in the e-grocer and the deal could be closed by the end of the month, sources said.