It's official! The debt-laden Air India has been handed over to the Tata Group after 67 years. The Tata group had founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.
The formalities have been completed. The Air India disinvestment process is closed. The shares have been transferred to Talace Pvt Ltd, which is the new owner of Air India, Tuhin Kant Pandey, Secretary, Department of Investment & Public Asset Management (DIPAM) stated on Thursday.
The transaction covers three entities – Air India, Air India Express and AI SATS. Air India is India’s flag carrier and premier full-service airline. Air India Express is a low-cost carrier. AI SATS provides a comprehensive suite of ground handling and cargo handling services.
Post the process completion, Tata Sons chairman N Chandrasekaran expressed, "We're totally delighted that this process is complete and happy to have Air India back in the Tata Group. We look forward to walking with everyone to create a world-class airline," Chandrasekharan said to reporters.
Following the handover to Tata Grpup, the conglomerate tweeted, "Your arrival was much awaited."
In an official statement, the conglomerate said, "The Tata Group would like to acknowledge Prime Minister Narendra Modi's commitment to reforms and faith in India's entrepreneurship spirit, which made this historic transition possible. Our Prime Minister has in action demonstrated what his commitment to 'Minimum Government, Maximum Governance' means."
Meanwhile, Civil aviation minister Jyotiraditya M Scindia took to Twitter to say, "This proves the govt’s ability, and the resolve to carry out disinvestment effectively in non-strategic sectors in the future."
Further, Ministry of Civil Aviation Secretary Rajiv Bansal informed that 12,000 employees will now work with to Tatas. "They’ll have to retain them for one year," he added.
Ahead of the handover, Chandrasekaran had met with Prime Minister Narendra Modi today.
The government had in October last year, inked the share purchase agreement with the Tata Group for the sale of national carrier Air India for Rs 18,000 crore.
The Tata group would pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline's debt.
The transaction was to be completed by December 2021, but the deadline was later extended till January 2022, owing to longer-than-expected time taken to complete procedural work.
Besides, non-core assets of Air India, including land and building, valued at Rs 14,718 crore are also being transferred to AIAHL.
Tatas would not get to retain non-core assets such as the Vasant Vihar Housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.
Further, of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.
While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas' stable - it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
Air India will give it access to a fleet of 117 wide-body and narrow-body aircraft and Air India Express Ltd another 24 narrow-body aircraft besides control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas such as London's Heathrow.
Air India started suffering losses every year since its merger with Indian Airlines in 2007-08. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012. However, the TAP did not work out and Air India continued to reel under losses with the government giving Rs 20 crore/day to keep the airline afloat.
Over the last decade more than Rs 1.10 lakh crore was infused by way of cash support and loan guarantee in the loss making airline to keep it afloat. The airline is suffering losses of Rs 20 crore/day currently.
On a standalone basis, Air India reported a net loss of Rs 5,422.6 crore during the April-September period of the current fiscal ending March 2022.