Tata Sons' Air India bid the frontrunner; Amit Shah-led GOM to take final call this week

After 68 years since Tata Airlines was taken over by Govt of India, the Tata Group has won the bid to take over national carrier Air India on Friday, as per ANI.  The ministerial committee headed by Union Home Minister Amit Shah is likely to meet later this week to clear the winning bid for the national carrier Air India. The Tata group, through its holding company, is believed to be the frontrunner and a formal announcement is likely after approval by the committee.

A top government source told ANI that all formalities regarding Air India divestment are complete now. The new owner will be decided by this weekend. There are only two bids, Tata Group and SpiceJet chief Ajay Singh in a personal capacity.

"Bids have been opened and the winner has been decided but the announcement will only come after the committee of ministers approves it," said the source. After approval from the GoM, bidders need to deposits a mandatory fifteen per cent of the amount of the final bid. The government will divest its 100 per cent stake in Air India, Air India Express and 50 per cent stake in ground handling company (AISATS). 

"The political leadership will take the final call. Approved bidders will have to deposit a minimum of 15 per cent of the bid amount," an official told ANI. Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Aviation Minister Jyotiraditya Scindia are also members of the committee.

While ANI sought official comments from the Office of the Ministry of Civil Aviation (MoCA) and MoCA Secretary regarding Air India disinvestment and their bids prices, the ministry declined to comment saying the matter is under high-level GoM under review. The share purchase agreement (SPA) has been given to the bidders in the meeting recently and the process will start after a formal announcement is made after it is approved by the Shah-led ministerial committee. Air India's reserve price was fixed after the bids were called to ensure that the bidders do not get to know about the reserve price prior to their bidding. 

Air India to be fully privatised

In June 2019, the Centre announced the disinvestment of the debt-ridden Air India. Then-Civil Aviation minister Hardeep Singh Puri had blamed volatile crude oil prices & adverse fluctuations in exchange rates for making it impossible to proceed with disinvestment. The bid later got delayed with the onset of COVID, running the air craft industry into deeper debt. According to the Central Government, it has infused funds to the tune of Rs 30,520.21 crore in Air India from the financial year 2011-12 till December this year.  The main hurdle that experts say has derailed the carrier's privatisation plan is investor scare of its oversized staff and debt obligations.

Tata Group - which already owns stakes in Vistara airlines and Air Asia has been eyeing to bring Air India back into Tata's folds for a long time. Air India, which was founded by J.R.D. Tata in 1932, was taken over by GOI in 1953 after the air carrier was nationalised. While JRD was initially made head of Air India's board, he was later dropped from the re-constituted board of both Air India and Indian Airlines in 1978 - an incident that still stings the Tata group heads. Tata group's airlines - Vistara and Air Asia have declared losses of  Rs 1,814 crore and  Rs 332 crore in fiscal 2020.

(With ANI Inputs)