Tata Sons to bid for Air India, in negotiations with SIA

Tata Sons Group, the holding company of the $113 billion “salt-to-software” conglomerates, reportedly stepped into negotiations with Singapore Airlines (SIA1) (SINGY) (SIA), through its joint venture Vistara, offering the airline to rule out a non-compete clause and join the company in a proposed bid for Air India. 

If SIA would not agree to the proposal, Tata Sons considered to bid the embattled Air India by itself despite the poor state of the airline, reported local media on November 27, 2020. While Tata Sons currently runs two air carriers, including Vistara, a joint venture with SIA, and Air Asia India, a joint venture with Air Asia Berhad, the group could consolidate its entire business into a single entity after taking over Air India.

According to local media, the offered agreement with SIA includes the provision that Vistara would have a right to undertake “full-service carrier” services over the whole Tata Group’s aviation business. If both parties did not reach an agreement and Tata Group would solo bid Air India, the condition would be invalid. Besides, Vistara’s bid would also require approval from SIA as well as Temasek Holdings, which owns 55% of SIA’s equity share capital. 

If Vistara purchased Air India, the shareholders of Vistara would have to assume the risk of a substantial outlay of funds. SIA and Temasek Holdings will have to gauge whether they are willing to make an investment and assume the risk when the industry faces such a huge slump, reported local media.

Back in January 2020, the government of India initiated the sale of 100% of Air India‘s equity share capital with an initial deadline in March 2020. However, the government was forced to put off the bidding for Air India four times due to the COVID-19 pandemic. Following the most recent update, the deadline for submitting bids for Air India was extended to December 14, 2020.


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