Tata grabs bigger slice of AirAsia India
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A number of bids have been put forward for India’s loss-making national carrier, including one on behalf of its employees. The Indian government had tried to offload its stake in Air India in 2018 but failed to attract a single bid. One group is representing employees and plans to offer them a controlling stake in the struggling airline. Another bid is reported to have been put forward by the Tata Group, which originally founded the airline in 1932.
Tata, which owns Jaguar Land Rover, sold its stake to the government in the 1950s. India’s Prime Minister Narendra Modi is keen to sell the government’s entire interest in the airline, which has been kept aloft by a bailout and racked up billions in debts. The airline has many assets, including prized slots at London’s Heathrow airport, a fleet of more than 100 planes and thousands of trained pilots and crew. One of the bids put in ahead of this week’s deadline was from US-based investment firm, Interups.
Under its plan, Interups will hold 49% of Air India while a controlling stake of 51% will be held by its employees.
“We are giving an open offer to employees of Air India to substantially own the airline,” Interups chairman Laxmi Prasad told the BBC.
“Our group will invest the entire monies required for the airline, with no capital requirement from employees to contribute into the acquisition effort.”
Calling them the “backbone to run the airline”, Mr Prasad added that the 51% stake would be “in exchange for the deep intangible contribution you all would be making for the airline.”
“No-one knows Air India better than its employees and management.”
“Any new owners will need to invest heavily in Air India, improving its technology and customer services operations,” said Jitendra Bhargava, former Executive Director of Air India and author of the book, The Descent of Air India.
“But India is a growing market and offers huge potential. My take is that Air India is better run as a private company than by bureaucrats.”
Interups, which specialises in turning companies around, says it has also targeted another Indian airline, and if successful, will merge it with Air India. They have not specified which airline that could be.
“The combined operations will make Air India a global leader for passenger traffic to and from India,” said Mr Prasad.
He described the potential battle with Tata for the airline as David versus Goliath. “But David mastered the winning, and we are equally confident.”
The Indian government is expected to notify the qualified bidders in early January 2021.
Questions & Answers
Q.Which company put forward the bid representing Air India's employees, and what is their proposed ownership structure?
Which company put forward the bid representing Air India's employees, and what is their proposed ownership structure?
US-based investment firm Interups put forward the bid. Under their plan, Interups will hold 49% of Air India, with employees holding a controlling 51% stake.
Q.What is the primary reason Interups stated for offering employees a majority stake in Air India?
What is the primary reason Interups stated for offering employees a majority stake in Air India?
Interups chairman Laxmi Prasad stated that employees are the “backbone to run the airline”. The 51% stake would be in exchange for their deep intangible contribution, without requiring them to contribute capital.
Q.Which other Indian airline has Interups targeted, and what is their intention if successful with both bids?
Which other Indian airline has Interups targeted, and what is their intention if successful with both bids?
Interups has targeted another unspecified Indian airline. If successful with both, they plan to merge it with Air India to create a global leader for passenger traffic to and from India.