'Most likely' winner of Air India bid identified: Report

The government has decided on a minimum reserve price for the beleaguered national carrier and met two bidders for further discussions

As the Centre looks to wrap up Air India's privatisation, authorities have shortlisted two contenders that are "most likely" to win the bid, besides setting a minimum reserve price for the national carrier at Rs 15,000-20,000 crore. There is no clarity yet on when the winning bid will be announced even as representatives from Tata Sons and SpiceJet chairman Ajay Singh met government officials on Wednesday.

Tata Sons, submitted a higher bid for Air India, while including indemnity clauses in its bid to protect itself from unexpected claims, according to a report in The Economic Times. "The high bid is made keeping in mind the national asset," a person aware of the developments told the publication.

Read | Govt looks to announce winning bid for Air India next month

The government expects the final bid to match the reserve price, but it may go ahead with the disinvestment process even if the bid is lower than the reserve price, according to a Business Standard report. “The airline is losing Rs 25 crore cash daily. It is estimated that if the current disinvestment exercise fails, the government will need to infuse close to Rs 650 crore per month to keep the airline running. So, this is not a revenue generating exercise but a process to arrest future losses,” a government official told the news organisation.

Bids for the carrier are being sought at enterprise value. Of Air India's total enterprise value, 15% will go to the government and the balance will be used to reduce existing debt, the ET report said. The airline's debt stands at Rs 43,000 crore. The government plans to clear Rs 20,000 crore debt that was incurred in the last two years due to Covid-19 and transfer the carrier to its new owners with a debt of Rs 23,000 crore.

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