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Tatas may begin talks with Delta-Air France consortium

V Phani Kumar & BS Bureau

With Singapore Airlines pulling out of the Air-India divestment race, the Tatas are likely to start a dialogue with Delta Airlines and Air France for a possible tieup.

Both Delta and Air France were keen on Air-India initially-the two had formed a consortium-but later pulled out as they could not find a suitable local partner.

Tata group sources said no official decision has yet been taken on the issue.

"It has been only one day since SIA has pulled out. At this stage, we are keeping all options open."

With SIA withdrawing its offer, the Tatas are now "hunting for an airline, which does not have a significant presence in India. The partner should also have recorded a good financial performance despite the slowdown in the aviation industry and is in a position to invest in the cash-strapped national carrier", another Tata insider said.

The Tata group, sole bidder to the 40 per cent government stake in Air-India, is in the process of sending feelers to their contacts in a few airlines that match the criteria.

"Not too many airlines which meet these criteria are likely to be interested in Air-India," a senior Tata executive said.

The Hindujas have already withdrawn from the race for A-I.

The executive categorically denied that the Tatas had contacted British Airways or Qantas for technical partnership saying that the financial performance of these airlines was unimpressive.

The executive said that Lufthansa was also not being contacted. Lufthansa had earlier submitted expressions of interest for the government stake in A-I.

Air France had contacted the Tatas for a partnership earlier but the talks did not fructify, the executive said.

She said that it would be difficult for the Tatas to find a replacement, which had the same resources as that of SIA.

South West, a trans American airline, does match up to SIA but it is a domestic airline and has already indicated its lack of interest in A-I.

The government may have to allow a special concession to the Tata group if it decides to bring in another partner following Singapore Airlines' withdrawal from the bidding consortium.

A need for the concession arises as the government had earlier specified that there cannot be any changes in the consortium after submission of the initial technical proposal.

Since the ITP stage has already elapsed, the concession in the technicalities becomes critical for the government to proceed with the divestment.

The divestment ministry is currently in the process of arriving at a reserve price for the airline. For this purpose, in addition to Morgan Stanley, the global adviser for the airline's divestment, two other consultancy firms have already been appointed to arrive at a valuation.

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