Government wanted to complete the transaction by December-end but the process is taking ‘longer than expected’
of Tata group Acquisition of loss-making national airline Air India An official said on Monday that there is likely to be a delay of a month till January due to longer than expected completion of the processes.
In October, the government accepted the highest Bidding made by Tata Sons Company For 100% Equity Shares of Air India and Air India Express with its 50% stake in ground-handling company AISATS – the first privatization in 20 years.
At the time, the government said it wanted to complete the transaction, in which Tata paid Rs 2,700 crore in cash by the end of December.
As per the terms in the SPA, all the handover formalities have to be completed within 8 weeks, but this date can be extended mutually by the buyer and seller and is being done in this case.
However, some regulatory approvals are yet to come for handing over, and some formalities are yet to be completed, the official, who did not wish to be named, said. PTI,
“The process will be completed by January,” he said without specifying a specific date.
On October 25, the government had signed a share purchase agreement with Tata Sons for the sale of national carrier Air India for Rs 18,000 crore. Tata will pay ₹2,700 crore in cash and acquire ₹15,300 crore airline debt,
Another official said that the cash component will come after the handover process is completed.
Tata beat the ₹15,100 crore offer by SpiceJet promoter Ajay Singh-led consortium and the ₹12,906 crore reserve price set by the government for the sale of its 100% stake in the loss-making carrier.
As of August 31, Air India had a total debt of Rs 61,562 crore. 75 per cent of this loan, or Rs 46,262 crore, will be transferred to AIAHL, a special purpose vehicle, before handing over the loss-making airline to the Tata Group.
Tata will not get to retain non-core assets such as Air India’s Vasant Vihar Housing Colony, Nariman Point, Air India Building in Mumbai and Air India Building in New Delhi.
Of the 141 Air India aircraft received by Tata, 42 are leased aircraft, while the remaining 99 are owned.
While this will be the first privatization since 2003–04, Air India will be the third airline brand in the Tata stable – it has a majority stake in Vistara, a joint venture with AirAsia India and Singapore Airlines Ltd.
Tata’s acquisition of Air India will give it access to 117 wide-body and narrow-body aircraft, and 24 other narrow-body aircraft of Air India Express Ltd, apart from 4,400 domestic and 1,800 international landings, and parking slots at domestic airports . ,
Air India started making losses every year since its merger with Indian Airlines in 2007-08.
In 2012, the previous UPA government approved the Turnaround Plan (TAP) and Financial Restructuring Plan (FRP) for Air India. 20 crores per day to keep the airline afloat.
Over the past decade, over ₹1.10 lakh crore has been invested through cash support and loan guarantees to keep the loss-making airline afloat.
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