There is unofficial news wide-spreading in the aviation segment that the Tata group could be the sole controller of Air India by the New Year. This will happen if it is the sole eligible bidder for India’s national carrier.
If the Tata bid is put in on or before the final submission date of August 31 and as it looks at the moment, Tata will likely be the sole eligible bidder.
Thereafter, if the Tata bid is deemed accepted, the 90 day period for handover shall commence and end by November 30 or at the most, by December 31. So, one possible scenario is for Tata to take control of Air India by January 1, 2021.
The Tata group, which already has a footprint in the airlines business, has shown interest in acquiring Air India, which at one point of time was under the Tata umbrella.
While the other bidders are not known yet, globally, airlines are under severe stress due to the Covid-19 pandemic and resultant disruption on air travel and tourism.
Tata is widely believed to emerge as the sole bidder for Air India and the salt to software conglomerate is likely to place a bid before August 31, the last date for bids for Air India, which the government has repeatedly said it will not be extended.
The group already has an airline venture in Vistara and it is not yet clear as to how or if it will consolidate the airline ventures including Vistara, Air Asia and the possible acquisition of Air India.
According to reports, the Tata group has already begun due diligence and is likely to put in a formal bid soon.
On the ensuing structure for the airline business, there is speculation that Tata is planning to merge its existing stake in AirAsia with Air India into a single entity.
Air India has been passing through a critical financial condition from much before the Covid-19 onslaught. The crippling effect of the pandemic, especially in the aviation sector, has further brought its finances to a precarious position. Recently, its pilots and other employees are on the warpath as Air India has laid off employees and started a Leave Without Pay (LWP) scheme.
From Tata Airlines and Air India to Vistara and AirAsia India, the Tata group has been an important part of the growing aviation sector in India.
From Tata Air Lines and the long-since nationalised Air India to strategic joint ventures with AirAsia Berhad and Singapore Airlines (SIA) for AirAsia India and Vistara, respectively, Tata has been present in the aviation sector.
The two joint venture airlines operate independently with their respective business models – low-cost (AirAsia) and full-service (Vistara).
There has been conjecture that Tata intends to combine its current interest in AirAsia with Air India to form a single organization, which would have significant phrazle implications for the future structure of the airline sector.