No takers for Air India as Tatas decide to opt out
11 April 2018
The prospects of an early sale of loss-making Air India seem to be getting thinner by the day, as no one seems interested in an airline where the Indian government continues to hold a stake. A report today says the Tata Group, widely seen as a potential suitor for the debt-ridden national carrier, is unlikely to consider a bid as the government's terms are too onerous.
The Union government finalised plans in late March to divest a 76-per cent stake in the loss-making airline and offload about $5.1 billion of its debt.
But the government has stipulated the winning bidder cannot merge the airline with existing businesses as long as it holds a stake. The winner may also be required to list Air India and would need to abide by conditions to safeguard employee interests, restricting its ability to cut staff.
Since the terms were disclosed, no company has come forward to reaffirm previous interest. Jet Airways and IndiGo have already publicly said they are no longer interested.
The Tata Group, which already has stakes in two airline joint ventures in India, does not see "how a deal would be workable" under the current terms, according to an unnamed source cited by The Economic Times.
The source also said the airline had too much debt and noted there was little clarity on what a buyer would be allowed to do with the airline's bloated workforce.
"Anyone who puts money upfront ... even for Tata to put in that kind of money, it would want complete control," added a second ET source.
Tata Sons, the holding company for the conglomerate Tata Group, declined to comment.
Prior to the disclosure of the terms, there had been some expression of interest from the group. In January, Leslie Thng, the chief executive of Vistara, a joint-venture between Tata and Singapore Airlines told reporters its owners were open to evaluating a bid for Air India.
Vistara declined to comment and Singapore Airlines had no immediate comment on Wednesday.
Last October, Tata Group chairman N Chandrasekaran said in a TV interview the group would "definitely look" at Air India once the privatisation process was finalised.