Tata Sons flies in consultants for due diligence on Air India
Tata Sons is keen on buying distressed national carrier Air India – and has roped in consultancies Bain & Company and Seabury Group to carry out pre-deal due diligence on the airline.
Air India is nearly Rs. 40,000 crores in debt, and has been looking for divestment opportunities since 2017 – when it owed creditors upwards of Rs. 50,000 crores. Expressions of interest were invited in 2019, and – after a significant pandemic-induced delay – bids came in by the end of 2020.
Among the bidders in consideration is Tata Sons – the Rs. 8 lakh crore holding company of one of India’s most well-known brands, Tata. Before moving forward, the company wants an in-depth understanding of Air India’s business fundamentals – from fleet strength, routes, equipment and procurement to hidden debt, obligations, liabilities and subsidiaries.
Helping with this comprehensive due diligence are Bain & Company and Seabury Group. Bain brings to the table its prestigious expertise in strategic and commercial due diligence, while Accenture-owned Seabury Group is a specialist aviation consultancy with knowledge of fleet planning, airline revenue streams, maintenance, repair and overhaul, and debt restructuring – among other capabilities.
The pair now set about a deep dive into Air India, following which Tata Sons is expected to make a formal financial offer for the troubled carrier. This would be the third airline in the conglomerate’s portfolio: Tata Sons co-owns Vistara with Singapore Airlines – the former with the 51% majority stake – and also owns nearly 84% of Air Asia.
According to Business Standard, Tata Sons has also hired aviation experts from Delta and United Airlines to help build a roadmap for integrating Air India within the wider airline portfolio once the deal is concluded.
A strategic investment: Air India’s distressed status will likely make for a low price tag, and the conglomerate hopes to flip its balance sheet at a time when air travel as a whole is regaining its momentum. Vaccine rollouts and eased restrictions are seeing an increase in business and leisure travel, and airlines worldwide are starting the long journey back to profitability.
