Even as government looks to privatise India’s state-run carrier Air India, there has been no word by Tata Group on Air India stake buy.
Even as government looks to privatise India’s state-run carrier Air India, there has been no word by Tata Group on Air India stake buy, ET Now reported citing Cogencis newsfeed. Further, consulting firm EY has been appointed as the transaction advisor. The government looks to finalise a suitable bidder in six to eight months, the channel reported. In October this year, Tata Sons executive chairman Natarajan Chandrasekaran had said the Mumbai-based group is considering buying an equity stake. “We will definitely look at it,” Natarajan Chandrasekaran had said, adding, “We still don’t have all the details. Every business proposal will be very seriously looked at and we will look at that (Air India). Definitely. But currently we don’t have the data… there are so many different groups within Air India and then there is real estate, there is debt, there is liabilities and we got to look at all of that it but we will definitely look at it.”
In September this year, Civil Aviation Minister Rajiv Nayan Choubey had clarified that India’s largest airline IndiGo is the only company to show official interest in Air India. Earlier, Bird Group, which provides various aviation services such as aircraft navigation, ground handling, customer management and logistics had formally written to the Civil Aviation Ministry expressing its interest in the debt-ridden Air India for its ground handling business. Rajiv Nayan Choubey, confirming the development had told reporters that the group has sent an expression of interest (EoI) for the same.
Earlier, IndiGo said that it is interested in buying Air India’s international operations. Given IndiGo’s leadership in the domestic market with a whopping 41% share and its aggressive plans to expand overseas, it augurs well for the company.
Air India is a distant third largest player in the Indian civil aviation market with a paltry 14% share. While that revenue would be a welcome addition to IndiGo’s kitty, it is Air India’s leadership in overseas passenger traffic with 17% of the international skies in its portfolio which is the main attraction for IndiGo, which itself has major ambition to quickly start adding international destinations to its network.
Air India, under intense competition from leaner, more efficient and often-cheaper private airlines, is reeling under a debt of over Rs 52,000 crore, with about Rs 28,000 crore in working capital debt, and about Rs 4,000 crore in interest burden alone. It has not turned profit in 10 years, since at least the year 2007. Air India has guzzled up taxpayer money over and over again but to no effect. The carrier has received bailout packages worth about Rs 24,000 crore out of a total Rs 30,000 crore approved, but has failed to revive its fortunes amid private airlines continuously gaining market share.