New Delhi: The Tata Group has reportedly started negotiations with Singapore Airlines (SIA), its joint venture partner in Vistara, to abandon a non-compete clause and join it in a proposed bid for the debt-laden Air India. The bid will be through Vistara, which is a full-service airline. It is worth mentioning here that his year, the Centre has had to postpone bidding for Air India four times in the wake of the coronavirus pandemic.
Tata Sons, the holding company of the $113 billion (Rs 8.34 lakh crore) salt-to-software conglomerate has decided to bid for the embattled national carrier, officials with knowledge of the matter told ET.
It is likely that SIA will give the green signal to the bid proposal. Further, the Tata Group is all set to bid solo for the ailing national carrier if the partner does not agree to the plans, the financial daily mentioned citing officials. Tata Sons would go ahead with the Air India bid irrespective of the outcome on the joint venture.
At present, the Mumbai-based conglomerate runs two airlines—full-fledged carrier Vistara (with SIA) and Air Asia India (with Air Asia Berhad)—and it is worth noting that Tata airlines business is not in good financial health. If Tata Sons becomes successful in taking over Air India, the group may consolidate its entire airline businesses under a single entity.
According to the officials cited above, the government is believed to be of the view that the Tata Group acquire and run Air India and has pledged to be helpful following privatisation on backing the group in dealing with bureaucratic hassles.
A group director familiar with the matter told the business daily: “Our group chairman has clearly stated that the airline businesses have to be consolidated and there cannot be multiple airlines. So Air India being a full-service carrier, it is only sensible that it will come under the Vistara business which is a full-service carrier too. So we are hopeful that our partner will be willing to participate in the future plans that include Air India.”
The pact with SIA clearly mentions that Vistara has an exclusive right to undertake “full-service carrier” services within the overall aviation business of the Tata Group. The Tata Group’s solo bid for Air India would breach this condition unless SIA gives a go-ahead.
More importantly, a bid by Vistara would also require approval from SIA and Temasek, which owns 55 per cent in SIA. Earlier, SIA and Temasek had reportedly flagged their concerns to Tata Sons about its proposed bid for the beleaguered national carrier.
27/11/20 ETNowNews.com
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