The Tata Group has emerged as the frontrunner to acquire Air India, as the government looks to close one of its most ambitious disinvestment projects. Multiple reports indicated that the government has finalised the minimum reserve price for the national carrier, based on future cash flow projection, brand value and slots in foreign airports. The reserve price is likely to be in the range of Rs 15,000 crore to Rs 20,000 crore, reported Business Standard. The report indicated that the government expects the final winning bid to at least match the minimum reserve price.
TATAS ACQUIRE AIR INDIA
Tata Sons is the likely frontrunner to acquire Air India as it is believed to have submitted a higher bid for the debt-laden airline. “Tatas have been very, very passionate about Air India,” Air India Director says.
More than 200 Tata Group personnel have been involved in the process, including M&A specialists from units such as Vistara, AirAsia India, Tata Steel and Indian Hotels. It may be noted that the Tatas are planning to merge all their airline business under one entity if it successfully bids for Air India. The Tatas have already conducted extensive due diligence involving three teams from AirAsia India, TCS and other external consultants. The group has also formed a separate company Talace Private Limited to participate in the Air India acquisition process.
An official announcement is likely to come after the Air India Specific Alternate Mechanism (AISAM), a group of ministers headed by Home Minister Amit Shah, ratifies the winning bid. Industry sources said that if the Tata Group manages to bring Air India under its umbrella again, it could consolidate its airline operations. A significant roadblock in its plan — the lack of Singapore Airlines’s waiver for the group to acquire Air India — was cleared recently.
As of August 2021, the three airlines together had a market share of 26.7% in the domestic air passenger market. Air India is placed second with a 13.2% market share, behind leader IndiGo’s (57%).