Thursday, April 12, 2018

‘Centre should make serious corrections in AI’s sale terms’

India's steel-to-autos conglomerate Tata Group, widely seen as a potential suitor for Air India, is unlikely to consider a bid for the state-run carrier as the government's terms are just too onerous, sources have said.

Keen to sell the loss-making, debt-ridden airline, finalised plans in late March to divest a 76 % stake and offload about $5.1 billion of its debt.

But the government has stipulated the winning bidder cannot merge the airline with existing businesses as long as the government holds a stake. The winner may also be required to list Air India and would need to abide by conditions designed to safeguard employee interests, restricting its ability to cut staff.

Since the terms were disclosed, no company has said it is interested or to reaffirmed previous interest, while Jet Airways and rival IndiGo, have already publicly opted out of the race.

Tata Group, which already owns stakes in two airline joint-ventures in India, does not see “how a deal would be workable. “Anyone who puts money upfront ... even for Tata to put in that kind of money, it would want complete control," sources said.

In January, Leslie Thng, the chief executive of Vistara, a joint-venture between Tata and Singapore Airlines told reporters its owners were open to evaluating a bid for Air India. Vistara declined to comment and Singapore Airlines had no immediate comment on Wednesday.
11/04/18 Reuters/The Hindu