Business & Economy

Tata group acquiring Air India incorrect report ?

Recently, reports stated that the national carrier Air India bid was won by Tata Sons after placing the highest, though the official decision on the bid winning was yet to be taken.

It was also said that by December, the government had plans to complete the handover of the airlines to its new owners.

But later the government denied and stated that the reports were incorrect. 

” Media reports indicating approval of financial bids by government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decisions as and when it is taken.” Secretary of the Department of Investment and Public Asset Management mentioned on the twitter page.

Tata Groups and SpiceJet chairman Ajay Singh had bid for the state-run airline Air India recently. Last year in the month of December the government invited expression of interest for the divestment of Air India. Then there was a  competition between four bidders to take over the beleaguered airline, out of which only Tata Group and Spicejet CEO Ajay Singh could last till the final stage.

Tata Groups founded Air India in 1932 and it was nationalised in 1953. Tata aimed at acquiring the airlines earlier also, including in 2001 along with Singapore Airlines but later withdrew the bid due to several factors. As per the sources, in the year 2015 Tata Group launched an airline in a 51:49 joint venture with Singapore Airlines and they also hold 83.67% stake in airline Air Asia India.

The government had already made two attempts to sell the carrier in the year 2001 and 2018 due to its loss, but unfortunately last time there was no bid at all. Hence as a third attempt in 2020 Air India was brought back to the table for sale after making several important changes in the terms of bidding like offloading 100% of its stake, compared with 76% earlier. The stake sale includes Air India’s 100% shareholding in AI Express Ltd, and 50% in Air India SATS Airport Service Private Ltd. 

The Tata Group is likely to be first in the race to own Air India. But the government has not given any formal approval about it. The prediction about Tata Group owning Air India was made when people got to know that the conglomerate had placed the highest bid than Spicejet CEO Ajay Singh. 

The Indian Express reported that, last week the representatives of both bidders were called for meetings on two occasions and a share-purchase agreement was discussed in order to help  them take a long-term view of Air India’s various liabilities and plan the funding accordingly.

The official announcement is expected to come after the Air India Specific Alternate Mechanism (AISAM) ratifies the winning bid.

Air India had been in loss for a very long time and after the Covid-19 pandemic hit their situation got even more worse. The global airline industry has witnessed the worst conditions in history. However, now there is a curiosity among everyone about the announcement of the winning bidder.

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