Monday, August 17, 2020

Tata Moves Closer To Acquiring Air India As Bid Deadline Nears

The Tata Group is moving closer in its bid to acquire Air India. Last week, the group officially announced its intentions to bid for the carrier, the first time it has done so publicly. Tata is currently conducting due diligence as it prepares to bid before the August 31st deadline. If successful, Tata could have full control of Air India as early as January next year.
One reason the Tata Group looks well-positioned to take over Air India is the fact that it could well be the only eligible bidder. Just a year ago, numerous airlines and companies were looking to invest in Air India and revamp the beleaguered carrier. However, the current downturn has forced airlines to struggle for survival and others to preserve capital.
This has left few, or just one, bidder willing to spend billions on an airline. The Tata Group has a long history in aviation, including as the founders of Air India. The conglomerate is still willing to invest in the carrier, hoping to capitalize on the rapidly-growing Indian market.

The Tata’s already have an impressive holding in the aviation industry, as majority owners of both AirAsia India and Vistara. While the former has struggled since its inception, Vistara is on its way to becoming to India’s newest long-haul carrier. The acquisition of Air India would add to the Tata’s portfolio, making them owners of both Indian long-haul carriers.
There is a lot to fix over at Air India, with the carrier struggling to pay for maintenance and its staff right now. Tata will have to take stock of the situation and quickly make widespread changes to Air India’s structure, which could include reducing the workforce and cutting some destinations. This won’t be easy but is critical to making the airline a success once again.

Once these changes are made, Tata could rebrand Air India, giving it a new livery and refitting cabins with a newer product, perhaps resembling Vistara’s widebody ones. A facelift and improved service could help with the bad press surrounding the airline over the last decade. Luckily, Tata’s history in hospitality (as owners of the Taj Hotels) could lend a hand to improving service at Air India.

As mentioned before, Tata owns two other airlines: AirAsia India and Vistara. With the addition of Air India, Tata might be interested in consolidating its investments. This could result in one international long-haul carrier and one domestic, medium-haul carrier. However, it is too early to say what the structure could look like.
17/08/20 Syd Sharma/Simple Flying
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