Air India Bid: Tata Sons The Frontrunner |
| Credit: NewsBytes |
ABOUT AIR INDIA
• Air India is the flag carrier airline of India, headquartered in New Delhi. It is owned by Air India Limited, a government-owned enterprise, and operates a fleet of Airbus and Boeing aircraft serving 102 domestic and international destinations. Air India was the largest international carrier out of India with an 18.6% market share. Over 45 international destinations are served by Air India across five continents. The airline became the 27th member of Star Alliance on 11 July 2014.
• The airline was founded by J.R.D. Tata as Tata Airlines in 1932. After World War II, it became a public limited company and was renamed Air India.
WHY AIR INDIA IS GETTING PRIVATISED?
• Union minister Hardeep Singh Puri announced that Air India will be completely disinvested and added that the choice is only between disinvestment or closing down the airline company.
• "Air India is a first-rate asset but has an accumulated debt of Rs 60,000 Crore. We need to draw the slate clean" Hardeep Singh Puri said.
• He said that the government is looking at a new timeline for Air India disinvestment and financial bids will be invited in the coming days.
BEGINNING OF FINANCIAL BID
• On January 27, 2020, the government invited Expression of Interest (Eol) for the proposed strategic disinvestment of Air India.
• The Centre initiated the process of inviting financial bids for the sale, taking another step towards privatization of the national carrier.
• It issued a request for proposal (RFP) to the shortlisted bidders, asking them to submit financial bids.
• After analyzing the preliminary bids, eligible bidders were given access to the Virtual Data Room (VDR) of Air India, following which investors' queries were answered.
TATA GROUP: THE FRONTRUNNER
• Tata Sons Ltd, the group holding company that controls Jaguar Land Rover and owns a majority stake in Air Asia India and Vistara, a joint venture with Singapore Airlines Ltd, submitted a bid for Air India earlier this month.
• The Tata Group has emerged as the frontrunner to acquire Air India, as the government looks to close one of its most ambitious disinvestment projects.
• Even as the government is yet to formally approve Tata's winning bid, people with direct knowledge of the matter said the Mumbai-based conglomerate has placed the highest bid - over Rs 5,000 crore.
OFFICIAL ANNOUNCEMENT
• An official announcement is likely to come after the Air India Specific Alternate Mechanism (AISAM), a group of ministers headed by Home Minister Amit Shah, ratifies the winning bid.
• A senior government official said that once the winner is announced, the share purchase agreement will be signed with the winning entity within 15 days, and the transfer process will begin immediately afterward.
• "We are targeting the complete transfer of assets to happen by mid-February," the official said.
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