“The Tata group
will have to choose from the various offers they are getting. A final decision will be taken before the EoIs are submitted,” said a source close to the development.
One of the main reasons why Tata Sons wants a financial partner is the unexpected outflow of funds from the group to pay Tata Teleservices
AGR (adjusted gross revenues), which has to be given to the government of India following a Supreme Court
Though the group has the financial muscle to invest on its own in Air India, a financial partner with global experience will come in handy, said a source in the group.
Besides, Tata Sons and Singapore Airlines invested an additional sum of Rs 500 crore in Tata-SIA Airlines, the operator of Vistara, in April this year.
An email sent to Tata Sons did not elicit any response.
The financial partners have indicated that Air India
may not receive aggressive bids due to the fall in valuation of airlines all over the world due to the pandemic. Since the pandemic has hit the global economy, several airlines have filed for bankruptcies and other have received generous bailouts from their respective governments.
In this background, the offers for Air India
are expected to be muted and very few airlines are likely to bid.
Another source said the Tatas would also have to sort out issues regarding its joint venture with AirAsia. While AirAsia has decided to exit the joint venture, seeking $50 million for its 49 per cent stake, the Tatas are evaluating the offer.
According to a source, a final decision on AirAsia’s fate will be taken before the conglomerate submits its EoI for Air India.
“There are likely to be two transactions. Air Asia
will sell its stake in the local JV and the financial partner will be offered the stake in AirAsia as well as the option to bid for Air India jointly,” the source said.
Airline analysts say once the pandemic is over, the prospects for full-service carriers like Air India and Vistara
will improve because they will be able to command higher yields in the international routes dominated by Air India.