Tata expected to swoop for lossmaking Air India

 Indian conglomerate Tata Group is expected to swoop for Air India, the lossmaking state carrier that successive governments have tried to sell.

The owner of steel plants and Jaguar Land Rover is set to make an initial bid after New Delhi sweetened the terms of the sale to attract buyers, said two people with knowledge of the situation.

The 152-year-old conglomerate, a $113bn-revenue group, plans to file an expression of interest (EOI) for the airline before a deadline for bids closes on Monday.

It comes after New Delhi revised the terms of a sale with plans to divest 100 per cent of its equity share capital in Air India and reduce the amount of debt a buyer would have to take on.

“This is the first step of a long process,” said one of the people about Tata’s EOI. Tata declined to comment.

The move takes the former chairman of Tata’s holding company Ratan Tata one step closer to reclaiming Air India.

Mr Tata’s ancestor J.R.D. Tata had founded the country’s first private carrier Tata Airlines in 1932 as a courier service before it became Air India and was nationalised in 1953.

Tata Group has often been touted as a potential suitor for Air India, but onerous sale conditions in the past have deterred it and other investors from bidding.

Air India has been lossmaking for years and has debts of more than $7bn.

Prime Minister Narendra Modi’s attempt to sell the state carrier in 2018 flopped after no company signalled interest. This prompted the government to revise the terms two years later to attract bids.

“Multiple expressions of interest have been received for strategic disinvestment of Air India. The transaction will now move to the second stage,” said India’s Department of Investment and Public Asset Management in a statement, without revealing the identity of the bidders.

Analysts said it was unclear how Tata would be able to integrate Air India with its two other airlines if it won the bid.

Tata Group runs Vistara, a full service carrier, in a joint venture with Singapore Airlines, and AirAsia India, a budget airline, run in partnership with Malaysia’s AirAsia.

Turning round Air India will incur “huge, huge costs”, said aviation analyst Ashish Nainan at Care Ratings. “It will take years for them to turn it round and I don’t think anyone has unlimited capital right now.”

Along with Air India, New Delhi is working to privatise other state-run companies as it battles to contain the fallout of the economic slowdown caused by the coronavirus pandemic.