The bid deadline for Air India has been extended once again, this time for two more months. Potential bidders now have until October 31st to submit their Expressions of Interest (EoI) in the flag carrier. The decision is a reversal from Civil Aviation Minister Hardeep Sigh Puri’s comments earlier this month, where he said another extension was not on the cards.
More time for potential bidders
Earlier this month, it seemed that the Air India bidding process was coming to a close. The Tata Group signaled that it was officially considering a bid and the government said a fourth extension was not coming. Under this timeline, there seemed there was only a single bidder for Air India, which was Tata.
However, yesterday, the government said it was extending the deadline once again at the behest of potential bidders who need more time due to the impact of COVID-19. It is unclear who the interested bidders are. Until now, the Tata Group seemed to be the only bidder for Air India.
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Bids will now close on 31st October, and the bidders who qualify will know by 20th November. The privatization process began back in January but has been significantly slowed by COVID-19. With most airlines and companies struggling to stay afloat through this crisis, it’s unlikely any are willing to shell out billions at this time.
Tata remains a likely bidder
While many expected Tata to finalize its bid by the end of the month, it’s possible the group just wants more time to conduct its due diligence. No other airline or large company has publicly announced its plans to bid for Air India, likely due to their own financial struggles because of the pandemic.
Tata looks keen to add Air India back to its portfolio, after seeing the airline become nationalized in 1953. The group has a long history in aviation and currently owns a majority stake in both AirAsia India and Vistara. The acquisition of Air India would make Tata one of the airline industry giants again.
Air India continues to struggle
As the bidding process drags on, Air India remains on precarious financial ground. The airline recently shut down half of its European bases and has laid out a strict leave-without-pay plan, which could see employees out of work for up to five years. These cost-cutting measures come as Air India’s schedule remains restricted to Vande Bharat repatriation flights.
According to sources, the government is also unwilling to fund the loss-making Air India, having already spent billions on preparing it for sale. With revenues severely limited and no government funds, the carrier is financially struggling.
If a new bidder does not take the reins soon, Air India may not survive in the long-term. We will find out more about the final bidders on 20th November. The winner will take control of the flag carrier in early 2021 if all goes on time.