Judgement Day? Not the Terminator movie franchise that we are talking about, but Air India’s bidding. Per the Ministry in charge of the divestment of Air India, the last date to submit an interest in Air India is December 14, 2020, 5 PM IST. There has been a lot of theatre behind the Air India divestment, something that has been dragging its feet since years, where even before the formal process opened IndiGo expressed interest in the International operations of Air India. A Tata bid for Air India was considered a certainty, but it did not happen the last time around the airline was put up for sale.
Coming to today, it seems various bidders are finally coming around to bid for the airline, after many extensions of the deadline and many sweeteners thrown in for the bidding process. While I hope the airline will be taken over and the legacy of the Air India brand protected, it’d take a village and a very ruthless approach to cut it to size.
On offer are 100% of the stake in Air India, Air India Express and Air India’s 50% stake in Air India SATS Airport Services, a joint venture with Singapore-based ground handling firm SATS (Singapore Airlines Terminal Services). The process for bidding was changed to an Enterprise Value based on after no success with the earlier options, but at least 15% of the EV will have to be still paid in cash.
Here are all the names that are doing the rounds of potential bidders for Air India.
Tata Bid for Air India
As the original owners of the airline, who established Tata Airlines in 1932, before it was nationalised in 1953, Tata has been perpetually in the fray for Air India. They have always looked at Singapore Airlines as the perfect partner to bring on board but seems Singapore Airlines has its preoccupation saving their airline from falling apart due to the CoVid-19 disruption of travel altogether over the year, and the consequent losses.
Bad news for the Tata Group is, there seems to be a clause in the Tata SIA joint venture agreement (Vistara) that there can be only one full-service carrier investment by the Tata Group. News reports indicate that while the Tatas are trying to get a waiver from SQ for this, they are not successful till so far. However, a Tata Bid for Air India seems almost inevitable.
One version is that Tata Group is using their interest in AirAsia India, where they are the significant shareholder, to express interest in Air India due to Singapore Airlines lack of interest in Air India divestment and the potential to hurt existing interests in Vistara.
Interups Inc & Air India Employees
US-based Interups Inc announced they would be placing a bid for Air India. On its website, Interups Inc states it is a publicly listed company engaged in the business of identifying and investing into business opportunities or transactions either directly or on behalf of its stakeholders, affiliates, associate concerns and clients. ITUP specialises in crafting turnkey solutions involving complex financial and strategic challenges for a diverse set of businesses around the world, including firms, corporations, governments, institutions, partnerships and individuals.
Interups seems to be very interested in Indian aviation and might be bidding on its own, or in partnership. MoneyControl reports that Interups will bid along with a group of employees of Air India who were interested in taking over the airline. The bid is being run by Meenakshi Malik, the current Commercial Director of the airline, and supported by 209 employees.
Interups Inc. was earlier reported to be in discussion with the Hinduja group to put in a bid, in January 2020. Their interest was confirmed in a Facebook post by the chairman of the company this morning.
Besides these two, various other interests have been shown from time to time, by the Adanis, the Hindujas and even SpiceJet. However, it is not clear who all will be making their move today.
Who do you think will be making an Expression of Interest in buying Air India today? Will there finally be a Tata Bid for Air India?