The Tata Group is reportedly in talks with its joint venture partner in Vistara, Singapore Airlines (SIA), to waive off a non-compete clause and partner with it in a proposed bid for the beleaguered national carrier Air India. The bid will be through Vistara, a full-service airline.
The pact with SIA states that Vistara has an exclusive right to undertake “full-service carrier” services within the overall aviation business of the Tata Group. The Tata Group’s solo bid for Air India would breach this condition unless SIA gives a go-ahead.
It is likely that SIA will give the green signal to the bid proposal, The Economic Times reported on Friday. The Tata Group might even go solo bidding for the ailing national carrier if SIA does not agree to the plans, the report said citing officials.
According to the officials cited above, the government is believed to be of the view to let the Tata Group acquire and run Air India and has pledged to be helpful following privatisation on backing the group in dealing with bureaucratic hassles.
“Our group chairman has clearly stated that the airline businesses have to be consolidated and there cannot be multiple airlines. So Air India being a full-service carrier, it is only sensible that it will come under the Vistara business which is a full-service carrier too. So we are hopeful that our partner will be willing to participate in the future plans that include Air India,” a group director familiar with the matter told the business daily.
More importantly, a bid by Vistara would also require approval from SIA and Temasek, which owns 55 per cent in SIA. Earlier, SIA and Temasek had reportedly flagged their concerns to Tata Sons about its proposed bid for the beleaguered national carrier.
The news of Tata's interest in Air India, which it founded 88 years ago, has been making headlines for about a year now. Lately, it was reported that the Tata Group would place a formal bid for Air India by the end of August, close to the bidding deadline.
The divestment of Air India restarted on January 27 this year with the government seeking to sell 100 per cent of its equity share capital in the state-owned airline, including Air India’s shareholding interest of 100 per cent in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.
Initially, a deadline of March 17 was set for interested parties to submit their bids. However, the Centre was forced to defer the bidding for Air India four times in the wake of the coronavirus pandemic. The last date for submission of Expression of Interest for Air India has now been extended till December 14 from October 30.
Currently, the airline sits on a debt of Rs 58,000-crore. And the Centre's divestment target from Air India is around Rs 60,000 crore.