Tata Sons Pvt. emerged as the winning bidder of Air India Ltd., ending the Indian government's decade-long struggle to offload the debt-laden carrier.
Tata Sons made an offer of Rs 18,000 crore, Tuhin Kanta Pandey, secretary at Department of Investment and Public Asset Management, said at a press briefing on Friday. A consortium of entrepreneur Ajay Singh, also chairman of SpiceJet Ltd., bid Rs 15,100 crore. The reserve price was Rs 12,906 crore.
Tata Group will get 100% stake in Air India, including its wholly owned subsidiary Air India Express, and 50% in ground handling unit Air India SATS Airports Services Pvt., according to a statement released by Tata Sons.
Coming full circle, the Tatas will take over Air India—which operates over 4,000 domestic and 2,700 international airline slots—more than half a century after the country's biggest conglomerate ceded control to the state. Tata Sons also owns a majority stake in AirAsia India.
Welcome back, Air India 🛬🏠 pic.twitter.com/euIREDIzkV
Air India's handover is a key victory for Prime Minister Narendra Modi, who has embarked on a privatisation plan to plug a widening budget deficit. Multiple governments have tried to sell the airline but those attempts were either met with political opposition or a lack of interest from potential buyers.
On Oct. 1, Bloomberg, quoting people aware of the matter, had reported that a panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate's bid ahead of an offer from Singh.
Air India has been struggling under the weight of debt and required regular support. Since fiscal 2010, the government has spent Rs 1.10 lakh crore to support the carrier, Pandey said.
The carrier had accumulated losses worth Rs 83,916 crore as of March 2021. And its total debt stood at Rs 61,562 crore as on Aug. 31, according to Pandey.
Tata Sons will take over Rs 15,300 crore, while liabilities worth Rs 46,262 crore will be moved to a special purpose vehicle, Air India Assets Holding Ltd., he said.
Meanwhile, aviation consultancy firm CAPA India said the carrier's liabilities were expected to cross $20 billion (Rs 1.49 lakh crore) by 2024-2025, which includes losses reported during FY21 and FY22 due to the pandemic.
Established in 1932 as Tata Airlines by industrialist and philanthropist JRD Tata, the carrier originally flew mails between Karachi in then Undivided, British-ruled India and Bombay (now Mumbai). It was merged with state-owned Indian Airlines in 2007, and by 2013, the Civil Aviation Ministry was clear that privatisation was key to its survival.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
