Tata Sons Pvt. was picked as the winning bidder for India’s flag carrier, closing decades of efforts to privatize a money-losing and debt-laden airline, and probably ending years of taxpayer bailouts that’s kept the company vital.
Tata Sons, which first launched Air India Ltd. with a namesake branding in 1932, bid ₹ 18,000 crores ($2.4 billion) as an industry value for Air India, Tuhin Kanta Pandey, the top official at India’s Department of Investment and Public Asset Management, spoke at a briefing on Friday. The government intends to finish the transaction by the end of 2021.
The high-profile sale is an addition for Prime Minister Narendra Modi, who has boarded on a bold privatization plan to plug a widening budget deficit, validating his stand of the state staying away from most businesses.
For Tata Sons, Air India unites a third airline brand to its firm and gives it access to more than a hundred planes, thousands of qualified pilots and crew, and lucrative landing and parking slots all around the globe.
Bloomberg News published last week that a council of ministers accepted a proposal from bureaucrats, who advised the conglomerate’s bid ahead of a proposal from entrepreneur Ajay Singh. The consortium headed by Singh, who’s also the chairman of budget carrier SpiceJet Ltd, bid ₹ 15,100 crores, Pandey told.
* The Tata Group will retain ₹ 15,300 crores of Air India’s debt and pay ₹ 2,700 crore cash to the government, Pandey said.
* The cash-strapped carrier had entire debt of ₹ 61,560 crores as of August 31, and the debt not absorbed by Tata Sons will be taken over by the government.
* The deal doesn’t cover Air India’s non-core assets like land and buildings, and Tata Sons will have to retain all of the airline’s employees for at least a year.
* Air India has a squadron of 117 wide-body and narrow-body aircraft and Air India Express Ltd. has 24 narrow body aircraft, Tata Group said in a statement.
Welcome back, Air India 🛬🏠 pic.twitter.com/euIREDIzkV
— Ratan N. Tata (@RNTata2000) October 8, 2021
“Welcome back, Air India,” Ratan Tata, JRD Tata’s successor and chairman emeritus of Tata Sons, told in a tweet. “While admittedly it will take essential effort to rebuild Air India, it will positively provide a very strong market opportunity to the Tata Group’s presence in the aviation industry.”
Air India – which hasn’t turned a profit since its 2007 alliance with Indian Airlines – contains prized landing and parking slots at London’s Heathrow airport, which may support Vistara lure business passengers with uninterrupted flights to Europe.