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Tata-SIA, Air France in reckoning for Air-India stake

India's Tata Group, Singapore Airlines, Air France and Delta Airlines all figure in a pruned list of bidders for a 40 per cent stake in Air-India, officials said on Thursday.

Industry officials said steel magnate L N Mittal, who has a technical alliance with British Airways and Qantas, had also crossed the first hurdle.

Up to a dozen bidders were initially believed to be in the race for the slice of the state-owned international carrier, but New Delhi announced last week that three had been disqualified because they did not fulfil all the requirements.

The Indian government has not officially named the firms on the shortlist or those which have been crossed out, but an official confirmed the bid by an Air-India pilots' union had been rejected.

The government hopes to sell a 60 per cent stake in Air-India, which has piled up losses of Rs 10 billion in the past five years.

Forty per cent will be sold to a "strategic investor" -- which would include a maximum 26-per cent stake for a foreign airline -- and 20 per cent to employees and financial institutions.

New Delhi also plans to sell 26 per cent of its equity in Indian Airlines, the state-run domestic carrier.

The government had announced the qualified bidders would be issued a confidentiality agreement and given until January 31 to submit technical proposals and business plans.

A final decision was originally expected to be made by the end of March, but officials said that this was almost certain to be delayed until the summer.

"On Monday, we received our confidentiality agreement for both Air-India and Indian Airlines. We will be signing it and submitting it shortly," a Tata spokesman said.

The Tata group, which was the original owner of the international carrier before it was nationalised in the 1950s, has allied itself with Singapore Airlines in its bid for the Air-India stake.

Besides the Tatas, the Hinduja group also confirmed it had received the confidentiality agreement and said it was in talks with unspecified foreign airlines over a bid.

Sources said a consortium comprising Air France and Delta Airlines had qualified for the next round and was looking for an Indian partner.

In recent weeks, the French ambassador to India Bernard de Montferrand was quoted by newspapers as saying that Air France had a very strong interest in Air-India.

The routes of the two airlines are complementary and do not overlap. Also Air France was in the same situation as Air-India 15 years ago and has direct experience of the privatisation process, he said.

Air-India's privatisation has attracted strong interest because the airline has landing rights in key cities in Europe, the United States and the Middle East.

Experts say that any airline which acquires a stake in Air-India would be in an strong position globally because routes over India provide a corridor between Asia and Europe.

Air-India has an ageing fleet of 26 aircraft and is currently unable to fly on many of the routes for which it has landing rights.

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