Govt Meets Air India Suitors Amid Bids' Evaluation

Sep. 30—NEW DELHI — Senior government officials on Wednesday met representatives of the Tata Group and businessman Ajay Singh, the two bidders for Air India, as the government evaluates their financial bids, a person aware of the matter said.

The government is looking to conclude the divestment process of the national carrier by the end of the ongoing fiscal year and could make an announcement about the winning bidder in the coming days, the person added, requesting anonymity.

According to a second person, RBSA Advisors and EY, who are advising the government on the sale, recently made a presentation on the airline's valuation to the government.

Tuhin Kanta Pandey, secretary of the finance ministry's Department of Investment and Public Asset Management (Dipam), didn't respond to text messages.

A spokesperson for Tata Group didn't immediately respond to a query. Ajay Singh, chairman and managing director of no-frills carrier SpiceJet Ltd, who has bid for the national carrier in his personal capacity, didn't respond to a text.

Press Trust of India on Wednesday reported that the financial bids for Air India are being evaluated against an undisclosed reserve price and that the bid offering the highest price above that benchmark would be accepted.

Air India, unprofitable since a merger with the erstwhile state-run Indian Airlines in 2007-08, had accumulated losses of as much as INR70,820 crore till 31 March 2020, according to the latest available data.

The government aims to divest its entire stake in Air India before the end of the fiscal after failing to find any buyer for a 76% stake in 2018. The plan is to sell the airline and its low-cost unit Air India Express, as well as a 50% stake in the ground handling company Air India SATS Airport Services Pvt. Ltd (AISATS).

The successful privatization of Air India is crucial for the government to attain its ambitious disinvestment target of INR1.75 trillion for this fiscal. It has so far garnered INR8,369 crore.

However, with big-ticket disinvestments such as the privatization of Bharat Petroleum Corp. Ltd and the mega initial share sale of Life Insurance Corp. Ltd lined up, the government is hopeful of meeting the target.

While the government remains committed to Air India's privatization, the carrier's liabilities are expected to cross $20 billion by 2024-25, including losses in FY21 and FY22 due to the pandemic, aviation consultant Capa India said in its India Aviation Outlook FY22.

"The government's intention to exit Air India is the right strategy and must be pursued aggressively. It would be unfortunate if the government has to continue to support the carrier when there are so many high priority health and social infrastructure projects post-covid," Capa India said.

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