After a gap of 68 years, debt-laden national carrier Air India returned to its founders Tata Sons, ending a decades-long struggle to offload the money-losing flag carrier.
The salt-to-software conglomerate placed a winning bid of ₹18,000 crore re-acquire the airline more than half a century after it ceded control to the Centre.
Apart from 100% stake in Air India and its low-cost arm, Air India Express, the winning bid also includes a 50% stake in ground-handling company Air India SATS Airport Services Private Limited (AISATS).
The process of Air India’s sale began in July 2017 and the government has received 7 expressions of interest by December last year, the Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) announced on Friday.
An SPV of Tata Sons – the holding company of conglomerate – has emerged as successful bidder, Tuhin Kanta Pandey, secretary to the DIPAM — the government department responsible for privatisation – said.
Tata Sons beat SpiceJet promoter to bag Air India.
For Tata Group, Air India adds a third airline brand to its stable, considering the conglomerate already holds a majority interest in AirAsia India and Vistara.
The DIPAM secretary said Tatas’ bid of ₹18,000 crore comprises taking over of 15,300 crore of debt and paying the rest in cash. Both bidders had quoted above the reserve price, he said adding the transaction is planned to be closed by December.
He said a group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia has cleared the winning bid for Air India on 4 October.
Air India reeling under a debt of over ₹60k cr
As per the Air India EoI floated by DIPAM in January last year, of the airline’s total debt of ₹60,074 crore as of March 31, 2019, the buyer would be required to absorb ₹23,286.5 crore.
The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007.
The airline will give the successful bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.
Besides, the bidder would get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports.
Air India history
This marks the return of Air India to the Tatas. Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was called Tata Airlines then.
In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe.
The international service was among the first public-private partnerships in India, with the government holding 49%, the Tatas keeping 25% and the public owning the rest. In 1953, Air India was nationalised.
The stake sale process, which began in January 2020, faced delays due to the ongoing coronavirus pandemic.
In April this year, the government asked potential bidders to put in financial bids. September 15 was the last day for putting in financial bids.
Tata Group was among the multiple entities that had put in an initial expression of interest (EoI) in December 2020 for buying the Maharaja.