As per a report published in The Economic Times, Vistara, the airline majority-owned by the Tata Group, may explore opportunities to bid for Air India, executives close to the matter said, whilst industry insiders said they expect the national carrier to finally find a buyer with the govt offering to sell 100% stake.
The govt too looked confident of getting a buyer this time, after its offer in 2018 to sell a 76% stake got no takers.
“We are certain … We are very clear we are going to get it done with,” said Hardeep Singh Puri, Aviation Minister. On the face of it, the 100% divestment offer “does not seem worth rejecting” and thus makes it as attractive to the Tatas on other industry players, said an executive.
“There is the emotional goodwill part too, considering that it had been a part of the Tatas initially (before the govt nationalized Air India). it’s too early though to make any blanket statement,” said the executive.
“We have just received the documents and tons of matters need detailed consideration in terms of their financial status.” Vistara, jointly owned by Tata Sons and Singapore Airlines, may consider the chance through an alliance with an investor or another airline because it would be a troublesome task for a single player to handle the acquisition. Tata Sons declined to comment.
Acquiring Air India would give Vistara a big foothold into the national carrier’s network, something it needs for scale. Vistara, which started with a capital of $100 crore, has been slow to expand and accounts for just 6.1% of the domestic market.
It started international flights only last year. Until November last year, Air India and its regional subsidiary, Air India Express, ferried the very best number of international passengers among Indian carriers.
In FY19, it carried around 22.1 million passengers. As of end-November 2019, it had a fleet of 121 planes. But the govt seemed determined to sell the carrier because it sweetened the offer this time after the failed attempt in 2018. it’s offering a 100% stake and has reduced the carrier’s debt to about INR 23,286 crore from INR 62,000 crore.
Pradeep Singh Kharola, Secretary, Aviation, said, “We are pretty hopeful of the divestment process this time.” The Tata Group had earlier held preliminary discussions to think about investment in the now-grounded Jet Airways. But further talks were scuttled over concerns that Jet’s promoters, the Goyals, would enforce a board seat.
Mark D Martin, the founder of Martin Consulting and an aviation expert, said that Air India should rightfully return to the Tatas which may be a better aerospace company with aviation in its DNA. “But this is not the proper economic climate to sell Air India since it’ll be a yard sale. None of the investment companies are willing to form any major commitment to India currently during a market where domestic consumption has dropped significantly,” he said.
(Source: The Economic Times)
To get travel updates directly on your mobile, save and send a message at 9461777617 on Whatsapp to start.
Also Read, Air India Disinvestment: Govt to sell 100 Percent stake in Air India; issues bid document
