The Tata Group remains the most serious contender for buying Air India, people aware of the matter said. The last date for submission of financial bids ends today and the salt-to-software conglomerate is likely to submit a bid today, sources indicated.
The relationship between the Tata Group and the Indian aviation sector is not just deep but also historic. Air India was founded as Tata Airlines by JRD Tata in 1932 and the airline was renamed Air India when it became a public limited company in 1946.
JRD Tata remained as Air India chairman until 1978 and even Ratan Tata was at the helm of Air India between 1986 and 1989.
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.
This time, the government has invited bids for strategic disinvestment of 100 percent stake of the government of India in the airline. It also includes along 100 percent stake in Air India Express Ltd and a 50 percent stake in Air India SATS. Due to the COVID-19 pandemic, the last date for submission of preliminary bids was extended from time to time. The process was initiated in January 2020.
The airline posted a net loss of Rs 3,836.78 crore in FY16, Rs 6,452.89 crore in FY17, Rs 5,348.18 crore in FY18, Rs 8,556.35 crore in FY19 and Rs 7,982.83 crore in FY20 as per provisional figures. The total debt of national carrier Air India has risen to around 43,000 crore, officials aware of the matter told CNBC-TV18.
As per the preliminary information memorandum, the total debt of Air India stood at Rs 58,282.9 crore as of March 2019. However, the Cabinet had given post-facto approval in February 2019 for the creation of SPV namely Air India Assets Holding Ltd (AIAHL). They had decided to transfer the debt of Air India Ltd amounting to Rs. 29,464 crore to the Special Purpose Vehicle (SPV).
If the deal with the Tata Group moves forward, then there may be a combination of synergies between Vistara, the full-service joint venture of Tata Group and Air India, and between AirAsia India and Air India Express, sources said.
On the other hand, SpiceJet CMD Ajay Singh is also likely to be another contender for Air India and may submit a financial bid for the airline in his personal capacity, sources indicated.
More details are expected to emerge by the end of the day from the Department of Investment and Public Asset Management (DIPAM) and the civil aviation ministry about the financial bids.