Singapore Airlines not to join Tata Group in bid for Air India

by S Venkat Narayan

Our Special Correspondent

NEW DELHI, January 30:

Singapore Airlines (SIA) is not keen to join India’s Tata Group in its bid for state-owned Air India, The Economic Times has reported quoting informed sources.

The Tata Group had hoped to rope in SIA and make the bid by way of their Vistara three-way partnership. The SIA has waived their no-compete clause, permitting the Tata Group to go forward with a solo bid for the ailing Air India.

Tata had been attempting to influence SIA to affix it on the Air India bid for months. A key cause for SIA’s reluctance is alleged to have been the long-term funding that Air India might need to return to viability.

Tata Sons, the holding firm of the conglomerate, cannot bid without SIA’s approval and its waiver of the no-compete clause. Tata may bid by itself or by way of its AirAsia India unit, in which it has been rising its stake, decreasing that of three-way partnership companion AirAsia Bhd.

While there are some challenges relating to this latter avenue, the group can work round them, executives said.

The Indian government is expected to take the process forward after shortlisting bidders for the airline by the end of the month.

“Putting in a bid through a particular entity is just a formality and not a challenge,” said a group executive. “The real work starts when EY will begin the due diligence on the bid once the government gives us the access to the data room.”

SIA declined to comment. “Singapore Airlines does not comment on investment opportunities, including in India,” said a spokesperson.

Like its global peers, the SIA too has been hit by the pandemic, forcing it to cut pay and retrench employees. The airliner will need to pump funds into itself rather than commit funds to Air India.

The Tata Group had been eager to make the bid by way of Vistara, which is also a full-service airline, and would have meant operational synergies. Tata Sons holds 51% of Vistara and SIA owns 49%. The firm is registered as Tata SIA Airlines Ltd.

AirAsia Bhd is understood to have released Tata from their no-compete clause, leaving the latter free to bid for Air India.

The Air India privatisation programme additionally consists of Air India Express, its regional worldwide low-fare arm. Tata Sons is elevating its stake in AirAsia India to 87% from 51%. The companions have been in talks to part ways as AirAsia Bhd plans to exit loss-making companies in India and Japan.

The Air India divestment has obtained expressions of interest from three entities, including the Tata Group. One of the choices being thought-about is getting a new group entity to bid for the enterprise. The Tata Sons M&A workforce and CFO Sourav Agarwal have been examining the financial contours of a possible transaction.