Deloitte begins due diligence on Vistara’s proposed Air India bid

MUMBAI: Deloitte has begun due diligence on the proposed bid for Air India by the Tata Group's airline company Vistara, a group official told ET. Bids for the debt-laden national carrier are scheduled to close on March 17, with a section of the industry believing that New Delhi would extend the deadline.

“Air India and Vistara are a good fit. Vistara may be a small airline in size, but you have to look at the considerable might and capabilities of its parents - the Tata Group and Singapore Airlines,” said a consultant who is helping the government on the proposed transaction.

Tata Sons and Vistara declined to comment.


Deloitte executives are expected to detail the pros and cons of buying the airline and submit their recommendations to the Vistara board. “There are several details to be ironed out even as the diligence is on, such as the ongoing discussions with Tony Fernandes,” an official said. Fernandes has stepped aside as the CEO of the AirAsia Group, pending the outcome of an ongoing bribery probe.

After failing in its earlier attempt to sell the airline, New Delhi sweetened the deal, reducing the carrier’s debt to be assumed by its buyer at `23,286 crore from `62,000 crore.

The deal is unlikely to come up for discussions before the Tata Sons board, scheduled to meet on March 6. The Tata Sons board reportedly had raised concerns earlier about a proposed bid for Jet Airways.

At present, the Vistara board will likely shepherd the Air India bid. Once a decision is reached, it will be taken to the Tata Sons board, officials said.

In November 2018, the Tata Sons board reportedly cautioned the management against rushing into any deal with Jet Airways, suggesting a thorough due diligence.

In case of Air India, group watchers say the Tatas have to consider negotiating several hurdles.

“There is a highly unionised workforce with conditions that will make the airline structurally uncompetitive. Also, there is an aircraft lease liability and there are concerns about guarantees on slots, something over which a national carrier has some advantages. That could go away,” said a group official.