Tata Group has emerged as the only contender to buy Air India, news agency IANS reported. The deadline to submit Expression of Interest (EoI) is August 31, 2020.
The report said while the Tata Group may move forward with the bid, its joint venture airlines, Singapore Airlines, has backed out of the venture in light of the constraints amid the coronavirus pandemic.
In June, Centre had announced another extension of the last date for submission of expression of interest (EoI) in Air India, delaying the disinvestment process of the carrier further. This, mainly due to the the COVID-19-led disruption.
The Tata Group already has a fair amount of presence in the aviation industry, and holds a 51 percent stake in Vistara, with the remaining 49 percent held by Singapore Airlines Limited.
Air India, which is up for divestment, has been in the doldrums much before the pandemic hit the economy. The airline, which was already in a precarious position with respect to financial woes, saw its condition worsen further amid the pandemic and its associated economic fallout.
The government, which had earlier in 2018 attempted in vain to sell Air India, had restarted the process in January. This time though, the government was willing to completely exit the airline. Earlier, only 75 percent of its stake was on offer.
To get more suitors, the Cabinet Committee on Economic Affairs (CCEA) on March 4 allowed non-resident Indians (NRIs) to own 100 percent stake in Air India.
Till then, NRIs were allowed to invest only 49 percent in Air India. The Cabinet, however, did not tweak the foreign direct investment (FDI) limit in Air India, which is currently at 49 percent through the government approval route.
One of the biggest hurdles earlier was the financial burden of Air India. To overcome that, the government will transfer much of the total debt of Rs 60,074 crore to a special purpose vehicle. The new owner will have to take on only Rs 23,286.5 crore.
But even the reduced debt burden could be a concern for investors, as the spread of coronavirus, globally and now in India, has created havoc in the aviation industry.