Air India has finally returned to its founders Tata Sons via the acquisition route, ending a decades-long struggle to offload the debt-laden national carrier.
Tata placed a winning bid of ₹18,000 crore to buy back the airline over 50 years after it ceded control to the Central Government. The salt-to-software corporate giant will again rule Air India, after a gap of 68 years.
In addition to a full share in Air India and its low-cost subsidiary, Air India Express, the winning bid included a 50% investment in Air India SATS Airport Services Private Limited (AISATS) a ground-handling business. The sale of Air India began in July 2017, and the government received seven expressions of interest by December of last year, according to the Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) on Friday.
Tuhin Kanta Pandey, secretary to the DIPAM (the government department responsible for privatisation), said that an SPV of Tata Sons, the conglomerate’s holding firm, had emerged as the victorious bidder.
Tata Sons outbid SpiceJet’s founder to acquire Air India.
Air India adds a third airline brand to Tata Group’s holdings, given that the company already owns a controlling stake in AirAsia India and Vistara.
Pandey said the proposal from Tatas includes taking over debt of Rs. 15,300 crore and paying the remainder in cash.
According to the DIPAM secretary, both bidders have offered beyond the reserve price. He added that the deal is expected to conclude in December
Air India is saddled with a debt of more than 60k cr.
According to the Air India EoI published by DIPAM in January last year, the buyer would be expected to absorb a total debt of 60,074 crore as of March 31, 2019.
They would transfer the remainder to Air India Assets Holding Ltd (AIAHL), a special purpose entity.
Air India merged with local carrier Indian Airlines in 2007. It has been losing money since the merger.
The airline will award the winning bidder 4,400 domestic and 1,800 international landing and parking spaces at domestic airports, as well as 900 slots at foreign airports.
In addition, the bidder will receive 100% ownership of Air India Express and 50% ownership of AISATS, which offers cargo and ground handling services at key Indian airports.
Dadabhoy, Jehangir Ratanji (JRD) Tata established the airline in 1932.
Tata Sons established its aviation branch as Air India in 1946. Air India International was formed with flights to Europe in 1948.
Air India was nationalised in 1953.
The continuing coronavirus epidemic caused delays in the share sale procedure, which began in January 2020.
Tata Group was one of many organisations that submitted a first expression of interest (EoI) in December last year to acquire Air India.