E-Paper
‘Delighted it’s back’: Tata group takes over Air India
Tata Sons chairman N Chandrasekaran met PM Narendra Modi in Delhi ahead of the formal takeover.
Tata Sons took control of Air India from the government on Thursday, the formal homecoming for India’s first airline born in the company in 1932 before it was nationalised nearly 70 years ago and began a turbulent journey that pushed its economic viability to the brink.
Also Read | Tata Group takes over Air India, credits PM Modi's commitment to reforms
The moment also caps a significant effort by the Union government to offload an airline that in the last financial year lost ₹27 crore of taxpayer money a day, and is the biggest disinvestment deal in decades.
“We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline,” Tata Sons chairman N Chandrasekaran said in a statement on Thursday, hours after meeting Prime Minister Narendra Modi.
“It is indeed noteworthy that the disinvestment process of @airindiain has been brought to a successful conclusion in a time-bound manner,” Union aviation minister Jyotiraditya Scindia said in a tweet. That proves the government’s ability and “the resolve to carry out disinvestment effectively in non-strategic sectors in the future,” he added.
Air India board members, along with former Air India chairman and managing director Pradeep Singh Kharola, secretary of civil aviation ministry Rajiv Bansal, and chairman and members of Tata Sons reached the airline’s headquarters around 2.30pm. The process of final handover was completed by around 3.30pm.
After completing the process, Tuhin K Pandey, department of investment and public asset management (DIPAM) secretary said; “All formalities have been completed. AI disinvestment transaction is closed. ₹2,700 crore has been received by the government. The shares have been transferred to Talace Pvt. Ltd. and so the new owner is Talace. The debt of ₹15,300 crore has been accepted (by the new owner). Air India is now not with the government.”
Soon after the formal handover of the airline, Tata Sons in a statement said: “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.”
Also Read | Welcome and welcome back: Tata Sons chairman's message to Air India employees
While Chandrasekaran did not comment on the formation of the new management, officials close to the development indicated that all four executive directors of Air India may be retained. “The board will be expanded in the coming days. The new members are awaiting security clearance,” an official said.
One of the officials, who asked not to be named, said Amrita Sharan (currently director, personnel) will be the new human resource head of Tata Air India. Company representatives did not confirm the plan.
On Thursday evening, Air India also sent out a circular to all its pilots to mandatorily make special welcome announcements in all departing flights on Friday.
Talace Pvt Ltd, a wholly-owned subsidiary of Tata Sons, has received 100% equity shares of Air India and AI Express. It will also get the government’s 50% stake in ground-handling company AISATS.
“It’s a very historic day because Air India gets a fresh lease of life under Tata’s control,” said Jitender Bhargava, a former executive director at Air India who’s written a book on the carrier’s downfall, news agency Bloomberg reported. Air India has weaknesses, Bhargava said, but the Tatas have the wherewithal to turn it around. “Air India will not only give Tata the scale, but also the number one position because of its vast network of international operations and a huge chunk of trained pilots and aircraft maintenance engineers,” he added.
Also Read | Air India flights under Tata Group will have these changes
The airline, with its Maharaja mascot, was once renowned for its lavishly decorated planes and service championed by founder JRD Tata. Air India was founded in 1932 and nationalised in 1953 and in the 50s, 60s and 70s, it led the global aviation boom.
Since the mid-2000s, Air India’s reputation declined as financial troubles mounted when it began to lose market share to low cost airlines like SpiceJet and IndiGo.
In October 2021, the government announced it sold its 100% stake to the autos-to-steel Tata conglomerate for ₹18,000 crore.
The Tatas won the bid by beating a ₹15,100 crore offer made by a consortium led by SpiceJet promoter Ajay Singh. The reserve price was ₹12,906 crore.
The bid amount includes about ₹15,300 crore of the carrier’s ₹61,562 crore debt. The remaining will be transferred to Air India Assets Holding Limited, a special purpose vehicle formed by the government.
On October 11, a Letter of Intent was issued to the Tata Group confirming the government’s willingness to sell its 100% stake in the airline. On October 25, the Centre signed the share purchase agreement for this deal.
For Tata Group, AI is the third airline. It holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd. It will also get the AI’s prized landing and parking slots. AI has control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports. It also has 900 slots at airports overseas such as London’s Heathrow and New York’s JFK.
