Tatas wins back Air India after 68 years with an 18,000-crore bid
Ratan Tata says it will take a “considerable effort” to rebuild the debt-ridden airline.
After 68 years, Air India is set to rejoin the Tata group. After quoting an enterprise value of 18,000 crore, Tata Sons subsidiary Talace Pvt Ltd emerged as the winning bidder for the debt-ridden national carrier. The government will incur a loss of Rs. 28,844 crore.
The Tatas will own 100% of Air India, as well as 100% of its international low-cost subsidiary Air India Express and 50% of the ground handling joint venture Air India SATS. Tatas will own iconic brands such as Air India, Indian Airlines, and the Maharajah in addition to 141 planes and access to a network of 173 destinations, including 55 international ones.
In its meeting on October 4, 2021, the Group of Ministers led by Home Minister Amit Shah approved the winning bidder. The government hopes to complete the transaction by December 2021, when it will transfer its stake in the airline and hand it over to the new owner.
The consortium led by Ajay Singh, the second bidder, had quoted an equity value of Rs 15,100 crore. The reserve price established by the government prior to the opening of bids on September 28 was Rs 12,906 crore.
The balance debt of 46,262 crore will be absorbed by the government and transferred to a special purpose vehicle (SPV) set up by it, Air India Assets Holding Limited. When non-core assets such as land and buildings worth 14,718 crore that will also be parked in the SPV and the cash amount of 2,700 crore from Tatas are deducted, the government’s net liability is 28,844 crore.
