Deloitte has begun due diligence on the proposed bid for Air India by the Tata Group’s airline company Vistara.

The government has extended the deadline for bidders from March 6 earlier to March 17. However, a section of the industry believes that the deadline might be further extended.

A consultant working closely with the government on the proposed transaction while commenting on the same told Economic Times, “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.”

Deloitte is expected to put forward the pros and cons of buying the national carrier 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.

New Delhi amid failing the earlier attempt to sell the airlines have reduced the carrier’s debt from INR 62,000 crore to INR 23,286 crore which is to be assumed buy its buyer.

The deal for the carrier is likely to come up amid the Tata Sons board meeting scheduled on March 6. Earlier in 2018, the Tata Sons board had also raised concerns 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 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.

Source: ET