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Air India Privatisation LIVE Updates: Salt-to-steel conglomerate Tata Sons has likely won the bid for national carrier Air India, Bloomberg has reported. An official decision and formal announcement is expected in the coming days. Moneycontrol has independently confirmed with sources at the Ministry of Civil Aviation that Tata Sons is indeed the frontrunner for the bid. The Tatas have a long history with Air India. It was JRD Tata who founded the airline and piloted the first flight that inaugurated Indian aviation in 1932. Currently, the conglomerate has majority stakes in two airlines - Vistara and AirAsia India.
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In its heyday,Air India did much more than ferry people, writes Ashwin Phadnis.It put India on the global map by acting as its brand ambassador. The king and queen of Sweden flew the Maharajaas did Pope Paul VI when he travelled to India in 1964.
It was not just the elite that Air India served. The flights to Wuhan to get back Indians stranded there due to the coronavirus outbreak last year were the latest in a long series of evacuations that the Maharaja has undertaken. The most significant of these was in 1990 when it brought back over 1,50,000 Indians from Iraq and Kuwait when conflict broke out there, a feat that earned it a place in the Guinness Book of Records.
Read:How the Maharaja fell from the skies
"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken," The DIPAM Secretary tweeted
As a part of its bids to acquire the government's 100 percent stake in Air India, the Tata Groupmay be willing to acquire around 15 percent of the airline's total debt, two people with knowledge of the matter told Moneycontrol.
"The Tata group as part of its bid has also proposed to negotiate and acquire a certain amount, at max 15 percent, of Air India's debt if the government is willing to meet certain requirements set by them," one of the people mentioned above told Moneycontrol.
Aviation stocks fell amid reports that Tata Sons had successfully bid for Air India and an official announcement was imminent.InterGlobe Aviation, which operates IndiGo, fell 2 percent at 12:27hours on October 1. SpiceJet andJet Airwaysshed half a percent each.
In the summer of 1945, an industrial mission led by JRD Tata and GD Birla set out (to Britain and the United States) with high expectations of turning international commercial rivalries to India’s advantage. Despite sharp criticism from Gandhi, and from smaller traders and manufacturers calling for protectionism, the industrial mission marked the high point of unity for Indian big business.
Read:Tatas have battled for Air India for decades, and once even tussled with the Birlas
More than a dream of owning Air India again, it is the scale which is attracting Tata Sons.To be successful in the business, the required scale can only be achieved in a non-organic manner. After over five years of operations, the combined market share of Vistara and AirAsia India has barely been able to challenge the number two spot.
With AirAsia India not yet having permission to fly abroad, it is even dismal on the international front. Vistara’s international expansion with wide-body aircraft has, sadly, coincided with the pandemic.
Read:Can the combined Tata power take on IndiGo?
The new owner will face problems at multiple levels. To begin with, the new owner will have to deal with Air India’s massive headcount — for instance, it has about 1,500 trained pilots and about 2,000 aircraft engineers to take care of the fleet. Moving from the work culture of a public sector undertaking under the government to meeting the expectations and work standards of a private sector owner will prove a challenge, an old Air India hand said.
Read:Here’s why Air India’s new owner will have its work cut out
Air India has long been referred to as a national asset. In a country where selling the family silver is frowned upon and Air India is often referred to as family silver, one wonders how a loss-making entity can be referred to in this manner, writes Ameya Joshi.
However, the airline does have assets - which will add value to its potential buyer. The sale is coming in with 100 percent of its subsidiary - Air India Express and its 50 percent stake in AI-SATS, the ground handling company.
Government officials met the two bidders of Air India for a second consecutive day - September 30 - to discuss the divestment of the airline.
Officials from the Ministry of Civil Aviation, Department of Investment and Public Asset Management, and the Directorate General of Civil Aviation met with officials from the Tata Group and Spicejet Chairman Ajay Singh.
This follows the September 29 meeting of officials with people representing Tata Sons and Singh, who has bid in personal capacity, to discuss the sale of the national carrier.
Moneycontrol has independently confirmed with sources atthe Ministry of Civil Aviation that Tata Sons is indeed the frontrunner for the bid. "The Tatas have placed the highestbid for Air India," the source said, adding that an official decision on the disinvestment rollout will be taken in the next few days.CNBC TV-18 has reported that the government plans to complete the hand over of the airlines toits new owners by December.
Moneycontrol has reached out to the Tata Sons too and a reply is awaited.
Hello and welcome to Moneycontrol’s LIVE coverage of the Air India bid! Salt-to-steel conglomerate Tata Sons has reportedly won the bid for the national carrier. Stay tuned for updates.
