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Tatas, SpiceJet chief in race as Air India divestment enters the concluding stage

The airline’s divestment is expected to give the successful bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots at airports overseas.

Written by Pranav Mukul | New Delhi |
Updated: September 16, 2021 7:12:40 am
air india, air india sale, air india stake saleThe government is seeking to sell 100 per cent of its stake in the state-owned national airline, including Air India's 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd. (File photo)

Air India’s disinvestment process has moved into the final stages, with Tata Sons and SpiceJet promoter Ajay Singh having submitted their final bids to acquire 100% stake in the national airline.

The stake sale includes Air India’s 100% shareholding in AI Express Ltd and 50% in Air India SATS Airport Services Private Ltd. “Financial bids for Air India disinvestment received by Transaction Adviser. Process now moves to concluding stage,” Secretary, Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey said in a tweet.

The government had in January last year invited submission of expressions of interest (EoIs) for full stake in Air India, and made certain changes to the bid conditions over time, including allowing interested parties to bid at an enterprise value of the airline, combining the values of both debt and equity. But, soon after the government opened invited bids, the Covid19 crisis had hit and the process had got delayed.

In April this year, the Centre had finalised the qualified interested bidders and asked them to submit a final bid.

A Tata Sons spokesperson and a source close to Singh confirmed their participation in the disinvestment process. Singh is bidding in his individual capacity. Officials in the Civil Aviation Ministry said that in an ideal situation the transfer of shares was to happen by December, but it is likely to happen by the end of current fiscal.

Notably, the government’s 2017 attempt at selling the airline had failed to attract any interest. After receiving feedback from potential investors, it had sweetened the EoI clause relating to transfer of debt to the new investor, giving bidders the flexibility to decide the quantum of the debt they wanted to absorb.

As per the EoI floated by DIPAM in January 2020, Air India’s total debt was Rs 60,074 crore as of March 31, 2019. The debt that is not absorbed by the investor would be transferred to Air India Assets Holding Ltd, a special purpose vehicle.

Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007.

The airline was founded by the Tata Group in 1932 and was nationalised in 1953. The Mumbai-based conglomerate has evinced interest in acquiring the airline on several past occasions.

In 2015, the group launched an airline in a 51:49 joint venture with Singapore Airlines. The group also holds 83.67% stake in the low-cost airline AirAsia India. Industry sources believe that if the Tata Group manages to bring Air India under its umbrella again, it could consolidate its airline operations. A significant roadblock in this plan — the lack of Singapore Airlines’ waiver for the group to go ahead and acquire Air India — was cleared recently.

The airline’s divestment is expected to give the successful bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots at airports overseas.

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