Air India Will Be Sold To Tata Group Or SpiceJet Before December; Deadline Over For Final Bids
Tata Sons and SpiceJet promoter Ajay Singh have submitted bids to take over Air India with the former being the frontrunner.
The airline was founded by the Tata Group in 1932 and was nationalised in 1953, and now it seems it could go back to its founding group.
September 15 was the deadline for financial bids to be submitted.
The Next Three Weeks
In about 3 weeks, two things will take place.
One, the government will select the winning bid.
Two, the inter-ministerial group (IMG) will decide the reserve price of the national carrier.
The winning bidder will have to offer the highest price above that benchmark.
Could Conclude By Year-End
The proposal will then be considered by the Core Group of Secretaries on Divestment (CGD).
If the bids are found to be satisfactory, the debt-laden national carrier could be handed over to the winner by December.
In order to complete the process by then, parameters that will have to be met by the buyer as well as the government.
The transaction timeline will also depend on the timely approval from the Competition Commission of India (CCI) and the lenders to Air India.
The Last Stage
The security clearance of the bidders is underway.
After the CGD gives the all clear, the proposal will be placed before the Air India Specific Alternative Mechanism (AISAM), headed by Union Home Minister Amit Shah.
The AISAM has the finance minister, commerce minister, and aviation minister as members.
The central government had made previous attempts to divest its stake in Air India- back in 2001 and 2017.
The Tata Group was a frontrunner even back then.
This time around, the government is looking to disinvest 100% of its stake in the airline.
This also includes 100% stake in low-cost subsidiary Air India Express Ltd and a 50% stake in ground-handling company Air India SATS.
The airline has a total debt of Rs 60,074 crore as of March 31, 2019.
The buyer would have to absorb Rs 23,286.5 crore, with the rest being transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
The successful bidder would acquire control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots at airports overseas.