Tata Group and SpiceJet promoter Ajay Singh have been shortlisted for the bid to buy out Air India, said people familiar with the development.
The two will now have to submit financial bids after completing due diligence on the national carrier’s books, agreements and liabilities. In their financial bids, the parties have to state the quantum of AI’s debt they will be willing to take up and the upfront payment they will make for the asset. Whoever quotes the highest economic value for AI will be the winner of the bid.
At least 15% of AI’s enterprise value has to be paid in cash and the balance can be taken as debt.
AI has a debt of over Rs 90,000 crore. It is estimated that the national carrier would report a Rs 10,000 crore loss this fiscal.
While Tata Group will be putting in its bid through AirAsia India, in which it holds a controlling stake, Singh has firmed up plans with a Middle East sovereign fund for the acquisition, it is learned.
Singh—who coined the famous “ab ki baar Modi sarkaar” slogan ahead of the 2014 general elections—or his spokesperson offered no comments on the report.
Sources said that Tata Group has been wooing its Southeast Asian full-service carrier partner Singapore Airlines to come on board for the AI bid. The conglomerate and Singapore Airlines run Vistara in India but the latter has shown an unenthusiastic response for AI as the Covid-19 pandemic has impacted its balance sheet. Industry has been speculating that AI would most likely go to the Tata Group.
India’s largest conglomerate, which also owns Jaguar Land Rover, originally founded AI in1932 but sold its interests to the government in1953. The group’s AI bid indicates its commitment to the air transport business; and the acquisition will ramp up its ambitions of emerging a significant player in the aviation sector.
The government hopes to complete the AI divestment by the second quarter of next fiscal. It is expected that the government will handhold the AI winner in the initial transition period when they anticipate trouble from unions and other stakeholders.