New Delhi: The government has begun evaluation of financial bids received from Tata Group and SpiceJet founder for the acquisition of Air India, sources said. With this, the privatisation process of the national flag carrier has moved to the next phase as the government looks to expeditiously conclude the deal.
The financial bids are being evaluated against an undisclosed reserve price and the bid offering the highest price above that benchmark would be accepted.
If successful, this will mark the return of Air India to Tata fold after 67 years.
The Tata Group founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.
Tatas operated a premier full-service carrier, Vistara, in partnership with Singapore Airlines. It wasn't immediately known if the group put in the bid on its own or through budget carrier AirAsia India.
Singapore Airlines was said to be not keen on participating in the privatisation programme as it would only add to Vistara's and its own financial troubles.
The government is seeking to sell 100 per cent of its stake in the state-owned national airline, including Air India's 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.
The stake sale process, which begun in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids. The last day for placing financial bids was September 15.
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 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 the Department of Investment and Public Asset Management (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, which was formed by the Tatas as a mail carrier in 1932, 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. Also Read: Delhi greenest city for real estate in India, check ranks of Mumbai, Bengaluru, other cities
Besides, the bidder would get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports. Also Read: Motorola Moto Tab G20 to launch on Sept 30 ahead of Flipkart Big Billion Days: Price, Specs, features