Tata Group unlikely to bid for Air India as terms too onerous - sources

India’s steel-to-autos conglomerate Tata Group, widely seen as a potential suitor for Air India, is unlikely to consider a bid for the state-run carrier as the government’s terms are just too onerous, two sources familiar with the matter said. India, keen to sell the loss-making, debt-ridden airline, finalised plans in late March to divest a 76% stake and offload about $5.1b of its debt. But the government has stipulated the winning bidder cannot merge the airline with existing businesses as long as the government holds a stake. The winner may also be required to list Air India and would need to abide by conditions designed to safeguard employee interests, restricting its ability to cut staff. Since the terms were disclosed, no company has come forward to say it is interested or to reaffirm previous interest, while Jet Airways and rival IndiGo, have already publicly opted out of the race. A lack of interest from Tata is likely to put pressure on the government to rethink its terms or even the structure of the sale. “The deal structure needs serious corrections,” said Amber Dubey, partner and India head of aerospace and defense at consultancy KPMG. He said the main challenges are the debt, the government’s residual 24% stake and the workforce, adding that the government should consult with potential bidders and simplify the terms.<br/>