Home / News / India /  Air India divestment: Govt says yet to take decision on winning bid
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NEW DELHI : The government is yet to take a decision on the winning bidder for national carrier Air India, secretary of Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey said on Friday.

"Media reports indicating approval of financial bids by (the) Government of India in the AI (Air India) disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken," Pandey said on social media platform Twitter.

Earlier in the day, news agency Bloomberg had reported that Tata Group has won the bid for Air India.

A panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate’s bid ahead of an offer from entrepreneur Ajay Singh, Bloomberg reported, quoting anonymous sources, who added that an official announcement is expected in coming days.

Mint had on 29 September reported that senior government officials met representatives of the Tata Group and businessman Ajay Singh, the two bidders for Air India, as the government evaluated their financial bids, and discussed the reserve price for the national carrier.

A bid offering the highest price above the reserve price is considered the winner.

The financial bids for Air India were submitted before the deadline of 15 September.

Tata Group and Ajay Singh, the chairman and managing director of SpiceJet Limited had in his personal capacity placed financial bids for the airline.

Tata Group is likely to have placed higher bids than Ajay Singh for the national carrier, a person aware of the matter said.

Mint, however, could not independently verify this.

Earlier on Tuesday, RBSA Advisors and EY, who are advising the government on the sale of the national carrier, made a presentation on the airline’s valuation to the government.

However, DIPAM secretary Tuhin Kanta Pandey didn't respond to texts on Friday. A spokesperson of Tata Group didn't offer comments.

Air India, unprofitable since a merger with the erstwhile state-run Indian Airlines in 2007-08, had accumulated losses of as much as 70,820 crore ( 708.2 billion) 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 1.75 trillion for this fiscal. It has so far garnered 83.69 billion

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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