Indian Gov't Shuns Reports Claiming Multinational Conglomerate Tata Sons Won the Bid for Air India
The Indian government has tried for a second time to sell Air India, after an unsuccessful attempt in 2018. The national carrier controls more than 4,400 domestic and 1,800 international landing and parking slots.
The Indian government on Friday dismissed media reports claiming that Tata Group has won the bid for the debt-laden national airline Air India.
The government's Department of Investment and Public Asset Management took to Twitter on Friday to clarify that the reports of the Air India disinvestment case are "incorrect".
This comes after a section of media outlets reported that the multinational company won the bid for Air India after handing it over to the Indian government over 50 years ago.
The Indian news agency ANI was among others reporting about Tata's victory, claiming that Tata Group was the highest bidder. "Union Home Minister Amit Shah-led ministerial panel has given approval to this bid", ANI reported, citing sources.
After the reports of Tata Sons' successful bid for the state-run airline Air India, aviation stock on the market declined.
According to the Indian business news website, MoneyControl, InterGlobe Aviation, which operates IndiGo, fell 2 percent at 12:27 p.m. (IST) on Friday. Meanwhile, SpiceJet and Jet Airways lost half a percent each.
The Indian government loses around $2.7 million (INR 200 million) to run the national airline Air India every day and this has accumulated losses of over $900 million, the Indian news outlet NDTV cited officials as saying.
The Narendra Modi-led government has been trying to sell its entire share in the airline for quite some time.
After the federal government did not receive any bidders for a majority stake three years ago, it was forced to change the terms. Media reports have since claimed that the Indian government is planning to hand over the airline to its new owners by the end of this year.
Last week, the Indian multinational public sector bank, the State Bank of India (SBI) had announced that it would "support" the Tata Group's bid for Air India by subscribing to the company's debentures or by funding the Tata Group's special purpose vehicle (SPV) for the acquisition.
14 August 2020, 08:00 GMT
Air India was founded by the Tata Group under the name Tata Airlines in 1932 and it was nationalised in 1953.
In January of last year, Air India's stake sale process began but it came to a halt due to the ongoing coronavirus pandemic. In April of this year, the Indian government invited bidders and the Tata Group was reportedly the highest bidder.
Established by India's first licensed pilot, legendary industrialist, and philanthropist J.R.D. Tata, the airline lost its charm on both international and domestic markets after the rise of private players in the 1990s.
Soon, gulf carriers also began to offer inexpensive travel to Europe and the US, which struck another blow to Air India.
After losses began to mount, in 2013 the government said privatisation was the only option. As per media reports, the airline has a debt of around 600 billion rupees ($8.1 billion).
The Indian government also asked the airline's employees to vacate their company-provided accommodations within six months of completion of the ongoing divestment process. The decision was officially announced by the chairman earlier this week.