Air India goes back to the Tatas as a private airline

After years of speculation, Tata Sons have finally won the bid to re-acquire national carrier Air India

Oct 08, 2021
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Air India goes back to the Tatas as a private airline

After years of speculation, Tata Sons have finally won the bid to re-acquire national carrier Air India. The salt-to-software conglomerate placed a winning bid of ₹ 18,000 crore (2.4 bn USD) to gain back control of the airline more than half a century after it was nationalised by the then Indian government, NDTV reported. 

Apart from 100 per cent stake in Air India and its low-cost arm, Air India Express, the winning bid also includes a 50 per cent stake in ground-handling company Air India SATS Airport Services Private Limited (AISATS). Tata's special purpose vehicle (SPV) Talace Pvt Limited emerged as the winning bidder, DIPAM Secretary Tuhin Kanta Pandey said.

As on August 31, 2021, Air India has a total debt of ₹ 61,562 crore (8.2 bn USD), out of that ₹ 15,300 will be taken over by the bidder, Pandey stated. So, ₹ 46,262 crore will be transferred to Air India Assets Holding Limited (AIAHL), he added. AIAHL is a SPV formed by the government.  Air India has accumulated losses of over ₹ 70,000 crore and the government loses nearly ₹ 20 crore every day.

Civil Aviation Secretary Rajiv Bansal said that the winning bidder will not retrench any employee for a minimum period of one year and if retrenched after a year, they will have to be offered VRS (voluntary retirement scheme).

Bansal entioned, "As of today, there are 12,085 employees in Air India out of which 8,084 are permanent and 4,001 are contractual. Besides this, Air India Express has an employee strength of 1,434."

Earlier this month both Tata Sons and SpiceJet chairman Ajay Singh (in his private capacity) had placed bids. Reports last month that Tata had won the bid were played down by Commerce Minister Piyush Goyal, who said then that nothing had been finalised.

In December 2020, the government invited expressions of interest for the divestment of Air India.

This was the second attempt by the Narendra Modi government to sell Air India. The government made an attempt in March 2018 but its expression of interest - to sell a 76 percent stake - had no takers over concerns regarding the airline's burgeoning debt. Despite its precarious finances, Air India still controls more than 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots overseas.

Air India began life as Tata Air Services in 1932 when it was founded by JRD Tata, the founder of the Tata group. The company was nationalised by the government in 1953. JRD Tata continued to be its chairman till 1977.  Air India became the first Asian airline to induct jet aircraft and started flying to New York in 1960.  At present, the Tata Group operates Vistara in partnership with Singapore Airlines and AirAsia India in partnership with Malaysia's AirAsia.