Tata Sons will be the new owner of the beleaguered state-run airline Air India, the Union government announced on Friday, October 8. With this, the Tata Sons take over the airline they founded in 1932. The Secretary of the Department of Investment and Public Asset Management Tuhin Kanta Pandey, announced that M/S Talace, a wholly owned subsidiary of Tata Sons, won the bid at Rs 18,000 crore. This transaction does not include non-core assets of Air India, including land and building which is valued at Rs 14,718 crore. The transaction is expected to be closed by the end of December 2021. According to him, Air India currently has incurs a loss of Rs 20 crore each day.
Secretary of the Ministry of Civil Aviation Rajeev Bansal who was Air India CMD said that Tata will retain all employees of Air India and no one will be retrenched for one year (not barring disciplinary action and staff regulation). For the second year, if anyone is to be retrenched, they will be offered VRS. Thirdly, Bansal said they will be provided provident fund and gratuity benefits as per the applicable law and the post-retirement medical benefits will be protected and provided by the government.
For the brand and logos of Air India, Pandey said that it will be transferred to Tata and they cannot transfer it for a period of five years. If they are to transfer it after that, it can be transferred domestically but cannot ever be transferred to a foreign entity.
Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline (called Tata Airlines at the time), and in 1946, the aviation division of Tata Sons was listed as Air India. 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. Currently, Tata Sons owns 84% in AirAsia India and a 51% stake in Vistara.
Tata Sons Chairman Emeritus Ratan Tata called winning the bid as great news.
â€śWhile admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata group's presence in the aviation industry,â€ť he said. He added that Tatas will have the opportunity of regaining the image and reputation that Air India enjoyed in earlier years.
The stake sale process in the airline, which began in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids. September 15, was the last day for putting in the bids. Tata Group was among the multiple entities that had put in an initial expression of interest (EoI) in December 2020 to buy the Maharaja.
With previous attempts, since 2017, failing to get any significant interest and after receiving feedback from potential investors, the government had in October last year sweetened the EoI clause relating to the transfer of Air India's debt to the new investor, giving bidders flexibility to decide on the quantum of humongous debt they want to absorb. As per the Air India EoI floated by DIPAM in January 2020, after some part of the debt being absorbed by the buyer, the rest will be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
The DIPAM Secretary said the total debt of Air India as on August 31, 2021, the debt is Rs 61,562 crore -- of which debt of Rs 15,300 crore will be take over by Tata Sons. The remaining Rs 46,262 crore of debt will be transferred to the AIAHL. The non-core assets of Air India will also be transferred to AIAHL. With this, the impact on the government of India is Rs 44,679 crore which will go to AIAHL, Pandey announced.
Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007.
As per what was announced earlier, the Tatas will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas. It will also get 100% of low-cost arm Air India Express and 50% of Air India SATS Airport Services Private Ltd, which provides cargo and ground handling services at major Indian airports.
With PTI inputs