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Airline Stocks Take Hit On Reports Of Air India-Tata Sons Buzz

The aviation stocks saw selling after news reports came to the fore that Tata Sons is leading the race for Air India. InterGlobe Aviation, which operates IndiGo, fell nearly 3 percent at 13:53 PM on October 1. SpiceJet and Jet Airways shed around half a percent each.

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It is not official as yet. But based on the news reports that Tata Sons is leading in the race to acquire national carrier Air India, the stocks of listed airlines including IndiGo, SpiceJet, and Jet Airways saw selling. IndiGo stocks (InterGlobe Aviation) were down 2.88 percent at 1:53 PM on October 1 to Rs 1,963.80 while SpiceJet was down 0.60 percent at Rs 74.70. 

It must be underlined here that the stocks of InterGlobe Aviation had reached an intraday high of Rs 2,029.00 before the news reports on Air India came out. On September 17, InterGlobe Aviation had hit a 52-week high at Rs 2,155 after having rallied 9 per cent on the BSE in intra-day trade.

As per the data from the Directorate General of Civil Aviation, IndiGo is currently the market leader with over 57 percent market share in the domestic aviation market whereas AirAsia India, Vistara and Air India collectively have a combined market share of 26 percent.

As per reports, if Tata Sons indeed win the bid for Air India and as part of the deal takes over 15 percent of the airline's debt, it would still get the control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at overseas airports. The winner would also get to control Air India Express, the low-cost arm of Air India, and half the control of AISATS—cargo and ground handling service arm located at major domestic airports.

At 12:05 PM, news agency ANI Tweeted: "Tata Sons wins the bid for national carrier Air India. Tata Sons was the highest bidder. Union Home Minister Amit Shah-led ministerial panel has given approval to this bid: Sources". At the time of filing this report, there was no official announcement from the Ministry of Civil Aviation.

Government sources, when contacted, did not confirm or deny the reports. "I can not comment on speculations," said a senior official in the ministry. However, the official confirmation, as is learned, may take some more time (expected later in the week), sources said.

Story So Far

The central government has been trying to sell Air India and its subsidiaries and supporting assets for the past decade or more. In 2017, when the bids failed to attract investors, the government decided to modify the deal and took the decision of seeking 100 percent of its stake in Air India. It also bundled in Air India’s 100 percent shareholding in AI Express Ltd and 50 percent in Air India SATS Airport Services.

The stake sale process, which begun in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids. The last day for placing financial bids was September 15, after which two bidders emerged—Ajay Singh (the promoter of SpiceJet) and Tata Sons. The Tata Group was among those who had put in an initial expression of interest (EoI) in December 2020 for Air India.

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