Tata Group has recently submitted an expression of interest for the flag carrier, Air India. But instead of going through with Vistara, an airline which the group co-owns with Singapore Airlines, the Indian conglomerate has submitted the expression of interest with AirAsia India. For the unaware, AirAsia India is also owned by the Tatas. As per a report from the Times of India, apart from Tata Group, two other parties namely Ajay Singh, owner of SpiceJet and 200 employees of Air India union are expected to place an expression of interest for the airline. More details on the story ahead.
Singapore Airlines Didn’t Feel Confident Investing With Loss Making Vistara
Singapore Airlines, the co-owner of Vistara with the Tata Sons, didn’t show any interest in investing in Air India. The Southeast Asian airline did not feel confident about overtaking another airline and adding it on top of Vistara, which hasn’t been generating profits.
Singapore Airlines felt that the addition of another airline would further the financial troubles of Vistara. It is worth noting that Air India already has debts and liabilities amounting to Rs 90,000 crore. At a time such as this where the air travel is not what it used to be, it would be a huge risk for any group to invest in it.
But the interest of Tata Group on the airline is understandable. After all, it was born out of the Tata Group and then sold to the government decades back. Now the Tata Group wants to bring the airline back home.
What’s interesting here is that if no party actually buys the airline, it would have to shut down. Aviation Minister, Hardeep Sing Puri in a tweet last year said that if the airline goes unsold, it will be shut down. But the chances of it shutting down now looks grim after the interest shown by the Tata Group.
The government has offered the interested buyers to purchase the airline 100% opposed to offering 76% initially. The winning bidder will be decided by looking at who quotes the highest EV value out of which 15% will have to be paid in cash, and the rest can be paid in the form of debt.
