Media reports of Tata Sons winning bid of Air India disinvestment are ‘incorrect’: Govt

Team Udayavani, Oct 1, 2021, 4:33 PM IST

The Department of Investment and Public Asset Management (DIPAM) secretary on Friday termed media reports indicating that Tata Sons have emerged as the top bidder for the takeover of debt-laden state-run airline Air India as ‘incorrect’.

Tuhin Kanta Pandey, DIPAM Secretary  – the government department responsible for privatization, in a tweet said the government has so far not approved the financial bids for Air India.

”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’s decision as and when it is taken,” he tweeted.

If its bid is accepted, Tata will take over the national carrier they once founded.

Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. The airline was called Tata Airlines then.

In 1946, the aviation division of Tata Sons was listed as Air India and, in 1948, the Air India International was launched with flights to Europe.

The international service was among the first public-private partnerships in India, with the government holding 49 percent, the Tatas keeping 25 percent, and the public owning the rest.

In 1953, Air India was nationalized.

The government is seeking to sell 100 percent of its stake in the state-owned national airline, including Air India’s 100 percent shareholding in AI Express Ltd and 50 percent in Air India SATS Airport Services Private Ltd.

The stake sale process, which began in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids.

September 15, was the last day for putting in financial bids.

Tata Group was among the multiple entities that had put in an initial expression of interest (EoI) in December 2020, for buying the Maharaja.

With previous attempts since 2017, failing to get any significant interest and after receiving feedback from potential investors, the government had in October last year sweetened the EoI clause relating to the transfer of Air India’s debt to the new investor, giving bidders flexibility to decide on the quantum of humongous debt they want to absorb.

As per the Air India EoI floated by DIPAM in January 2020, of the airline’s total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore.

The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.

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

The airline will give the successful bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.

Besides, the bidder would get 100 percent of the low-cost arm Air India Express and 50 percent of AISATS, which provides cargo and ground handling services at major Indian airports.