Tata Sons Pvt. was selected as the winning bidder for India’s flag carrier, ending decades of attempts to privatise a money-losing and debt-laden airline, and potentially ending years of taxpayer-bailouts thats kept the company alive.
“Welcome back, Air India,” tweeted Tata Group’s chairman emeritus Ratan Tata after the conglomerate won the bid to acquire the cash-strapped airlines.
Tata Sons, which originally launched Air India Ltd. with a namesake branding in 1932, bid ₹ 18,000 crore ($2.4 billion) as an enterprise value for Air India, Tuhin Kanta Pandey, the top bureaucrat at India’s Department of Investment and Public Asset Management, said at a briefing on Friday. The government aims to complete the transaction by the end of 2021.
Tata concluded by thanking the government for its recent policy of opening select industries to private the sector.
For Tata Sons, Air India adds a third airline brand to its stable, and gives it access to more than a hundred planes, thousands of trained pilots and crew, and lucrative landing and parking slots all around the world.
Bloomberg News reported last week that a panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate’s bid ahead of an offer from entrepreneur Ajay Singh. The consortium led by Singh, who’s also the chairman of budget carrier SpiceJet Ltd, bid ₹ 15,100 crore, Pandey said.
- The Tata Group will retain ₹ 15,300 crore of Air India’s debt and pay ₹ 2,700 crore cash to the government, Pandey said.
- The cash-strapped carrier had total debt of ₹ 61,560 crore as of August 31, and the debt not absorbed by Tata Sons will be taken over by the government.
- The deal doesn’t include 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 fleet of 117 wide-body and narrow body aircraft and Air India Express Ltd. has 24 narrow body aircraft, Tata Group said in a statement.