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SIA to exit Air-India bidding

Singapore Airlines is looking to pull out from the bidding for Air-India, jeopardising the partial sale of the money-losing airline, a government source said on Friday.

"SIA's interest is nearly over," the source said. "It will make a formal announcement once the Tatas have decided on a new partner. They (SIA) are just giving the Tatas time."

Singapore Airlines, the world's third most profitable airline, and the Tata group comprise the only consortium left in the bidding for a 40 percent stake in India's state-run flagship airline.

An official at Singapore Airlines said no decision has been taken.

"Our position on Air-India is unchanged," a spokesman said, referring to a August 2 statement which said SIA has not made a final bid or withdrawn from the bidding process.

"The Tata-SIA partnership is in the running," a Tata official said. "But both partners are concerned with the politics and the sheer noise surrounding the deal."

The sale of debt-ridden Air-India is seen as a litmus test for the second phase of India's economic reforms.

The government would be left with no other option but to abandon the sale if the Tatas fail to find a new partner. Privatisation minister Arun Shourie told the parliament last week that criticism of sale of state-run companies was scaring away bidders.

No price bid

The Tata-SIA team has not yet been asked to submit a price bid as the government grapples with the twin issues of disqualifying another bidder -- the UK-based billionaire Hinduja brothers -- and accusations that with a single player in the running it might be tempted to sell the airline on the cheap.

The Tata-SIA team completed examining Air-India's books in May this year.

Estimates of Air-India's total value span a huge range, starting from $2.13 billion to a conservative $500 million.

Analysts have said that the Tata-SIA combine may be hoping to drive down expectations on how much the stake sale will fetch.

Though Swissair, Emirates, British Airways, and the Delta-Air France combine showed an initial interest in Air-India, they dropped out leaving only the Singapore Airlines-Tata team in the running.

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