India's Tata Group is moving close to regaining control of India's iconic airline it founded 87 years ago as it is all set to formally bid for the loss-making carrier before the August 31 deadline as the sole eligible suitor.

Tata Group, India's pre-eminent business house with a storied past, has reportedly confirmed the news and initiated due diligence on Air India 67 years after the carrier was taken over by the government as part of the nationalisation programme.

"Tata Sons is currently evaluating the proposal and will consider a bid after due consideration and at the appropriate time. There is no plan to bring in a financial partner," said a spokesperson of the Tata Group, which currently is the co-owner of legacy carrier Vistara and low-cost airline Air Asia. The two joint venture airlines operate independently with their respective business models.

Air India, the debt-ridden national carrier, was founded as a division of Tata Sons Ltd in 1932 with the legendary industrialist-cum-aviator JRD Tata at the helm. It was operated as Tata Airlines until 1946. After 1946, the airline became a public limited company and was renamed Air India.

In 1953, when New Delhi nationalised Air India, JRD Tata became the airline's chairman, and under his leadership the carrier thrived until he was removed in 1977 by the government led by Prime Minister Morarji Desai.

After abandoning a previous plan of retaining a minority 24 per cent in Air India, the Indian government has been trying to fully exit the embattled carrier with an accrued debt pile-up of Rs582.83 billion. However, the move to disinvest 76 per cent received only a lukewarm response and consequently the deadline for submitting an expression of interest was put off from March 17 to August 31.

Airline sources said bidders would need to absorb Rs232.86 billion, or almost one-third of the total debt, accrued by Air India and its subsidiary Air India Express. The remaining debt will be transferred to Air India Assets Holding Ltd, a special purpose vehicle of the national carrier.

Industry watchers said if the Tata bid is deemed accepted, the 90-day period for handover shall commence and end by November 30 or at the most, by December 31. In such a scenario, it is highly possible that Tata Group will eventually retake control of Air India by January 1, 2021.

Speculation is also rife on how Tata Group would be restructuring its current joint venture aviation businesses in the likely event of acquiring Air India. Analysts see the possibility of merging the group's stake in AirAsia with Air India to form a single entity.

Tata Group operates Vistara as a 51-49 per cent joint venture with Singapore Airlines. They also hold 51 per cent in AirAsia India, a joint venture with a Malaysian entrepreneur Tony Fernandes, who holds the remaining 49 per cent.

According to another report, Tata Group has approached Fernandes for his approval to acquire Air India's low-cost carrier AI Express as the shareholders' agreement stipulated that Tatas can't invest more than 10 per cent in another budget airline without Fernandes being willing to waive the covenant. One proposal said to be under consideration is to combine AirAsia India and AI Express, in lieu of the waiver.