New Delhi, April 12, 2018: In yet another blow to the prospects of divestment of state-run carrier Air India, Tata Group — one of the potential players in the sale — is unlikely to consider bidding, news agency Reuters reported on Tuesday, quoting sources.
Tata-Singapore Airlines (SIA) JV Vistara was the only airline other than IndiGowhich had officially expressed interest in the sale.
The Tata Group reportedly finds the terms of the sale set by government, ‘too onerous.’ Tata Group, which already owns stakes in two airline joint-ventures in India, does not see “how a deal would be workable” under the current terms, said one of the sources, who asked not to be identified due to the sensitivity of the matter.
The same 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 large workforce. “Anyone who puts money upfront … even for Tata to put in that kind of money, it would want complete control,” added the second source.
Tata Sons, the holding company for the conglomerate Tata Group, declined to comment.
According to the reports published in timesofindia.indiatimes.com 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.
If the Tata Group indeed sits out of the bidding process to acquire Air India, it will be the third among likely buyers to pull out. Earlier, IndiGo and Jet Airways rules themselves out. On Thursday last week, IndiGo, the first airline to show interest in the divestment pulled out citing that it was interested in the international operations of Air India, which is not available under the government’s current divestiture plans.
Later on Monday, Jet Airways, another likely suitor, said it would not be participating in the process.
On March 28, the government unveiled plans to sell up to 76 per cent stake in Air India and transfer the management control to private players, starting the ambitious strategic disinvestment process for the debt-laden national carrier.