Is Tata Sons the winning bidder for ailing Air India? Govt says no decision yet

Air India
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India's finance ministry said on Friday reports suggesting the government has picked a winning bid for the debt-laden state-run airline Air India were incorrect.

Earlier on Friday, Bloomberg reported that a panel of ministers accepted a proposal from officials recommending salt-to-software conglomerate Tata Sons ahead of an offer from Ajay Singh, promoter of India's airline operator Spicejet Ltd.

"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect," the ministry said in a tweet. "Media will be informed of the Government decision as and when it is taken."

Air India and Tata Sons declined to comment.

Earlier this month the finance ministry said it had received bids for the airline, but did not name the bidders.

A possible sale would come at a time the airline industry is trying to recover from the slump in travel caused by restrictions aimed at containing the coronavirus pandemic.

This would also be seen as a relief to Prime Minister Narendra Modi's government, which has been pushing to sell its entire interest in the loss-making airline.

The winning bidder would win control of Air India's 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas, including London's Heathrow Airport.

It would also get 100% of the low-cost arm Air India Express and 50% of AISATS, which provides cargo and ground handling services at major Indian airports.

The government loses nearly 200 million rupees every day to run the national carrier, which has accumulated losses of over 700 billion rupees ($9.53 billion), officials have said.

An effort to auction a majority stake almost three years ago drew no bids, forcing the government to ease the terms. It had also extended the deadline multiple times during the pandemic.

Air India staff asked to vacate company accommodation in 6 months

Meanwhile, the Centre has asked the aircraft carrier to ensure that its employees vacate the company-provided accommodations within six months from the divestment of the airline or the monetisation of properties.

Employees staying in company accommodations in different housing establishments will have to vacate or face strict penal action or heavy monitory penalty with disciplinary action.

The decision, according to the employees, comes as a rude shock, especially in metro cities like Delhi or Mumbai, where housing rentals are "sky-high".

At present, Air India has colonies in both Delhi and Mumbai. Flats in these colonies were allotted to the employees on subsidised rates.

The development assumes significance as the divestment process has picked-up pace and is said to be in its final stages.

In a letter to the Air India CMD, the Ministry of Civil Aviation said on September 29: "AI employees may continue to stay at the residential colonies of the company post disinvestment for a period of six months or till the property is monetised, whichever is earlier.

"Appropriate binding legal and other arrangements, including financial disincentives, should be formulated to enable prompt vacation of the properties by the employees."

The decision as per the letter was taken by the Air India Specific Alternative Mechanism (AISAM) at its meeting held on August 9, 2021.

Besides, the letter detailed that employees retiring as of September 30, 2021, may be allowed to retain the accommodation for a maximum period of four months or within six months post disinvestment or "till the property is monetised whichever is earlier".

"No extension in retention beyond four months shall be provided under any circumstances," it said.

The serving employees residing in AI colonies shall vacate the allotted accommodation within a period of six months post disinvestment or till the property is monetised.

"These new rules have not mandated the airline to provide alternative residential arrangements. There is anxiety among employees that many might become homeless with families in metros like Delhi and Mumbai, especially during the ongoing pandemic," a senior airline staffer said.

(With inputs from Reuters and IANS.)

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