The central government transferred itself on Thursday With share, control and management in Air India, Tata Sons Subsidiary Tales ended a disinvestment process that began five years ago and saw a failed attempt. The airline has been a public sector undertaking since 1953.
The transaction involves the government’s entire 50% stake in Air India, Air India Express and AI SATS, a joint venture ground handling company.
“We are excited to bring Air India back to the Tata Group and are committed to making it a world-class airline. I warmly welcome all Air India employees to our group,” said N. Chandrasekaran, Chairman, Tata Sons And look forward to working together.Earlier he met Prime Minister Modi.
Mr. Chandrasekaran’s remarks came after the last meeting of the existing board of the airline, chaired by Rajiv Bansal, Secretary, Ministry of Civil Aviation. Four of the existing directors on the board have been retained on the new board, which will be expanded in the coming days. “The new board members are awaiting security clearance,” a source said.
The Tata Group said in a statement that it “philosophically agrees with the Prime Minister’s vision of making the aviation sector affordable”. The government’s total disinvestment target for the financial year 2021-2022 is Rs 1.75 lakh crore.
Tata Sons has taken a loan of ₹15,300 crore as well as paid ₹2,700 crore in cash for the airline. The government has borne the outstanding debt of ₹ 62,057 crore. Some non-core assets of Air India with a book value of Rs 14,718 crore will also remain with the government. The government’s total disinvestment target for the financial year 2021-2022 is Rs 1.75 lakh crore.
look | How Air India came back to Tata
“Formalities have been completed. Air India’s disinvestment transaction has now closed. The shares have been transferred to Tales. Cash consideration of ₹2,700 crore has been received and loan of ₹15,300 crore has been sanctioned [by the new owners]Tuhin K Pandey, Secretary, Department of Investment and Public Asset Management, told reporters here.
Tata will get the ownership of reputed brands like Air India, Indian Airlines and Maharaja as well as Air India’s fleet of 141 aircraft. 13,500 permanent and contract workers will also move to the Tata fold and will have to be retained for at least one year.
The Tata group now owns three airlines with Vistara holding a 51% stake and AirAsia India holding 84%. The three airlines together account for 24 per cent of the market share in the aviation sector.
In June 2017, the Union Cabinet had given in-principle approval for the disinvestment of Air India. The following year, the government invited bids for a 76% stake in the airline, but failed to attract any buyers. In January 2020, the government launched a new effort to sell its 100% stake in the airline. An attempt by the Atal Bihari Vajpayee government in 2000-2001 to sell a 40% stake in Air India also failed.
The airline was established in 1932, when JRD Tata operated the inaugural flight between Karachi and Bombay. Then it was known as Tata Airlines. The government acquired a 49% stake in Carrier in 1948, followed by its nationalization in 1953. The name of the airline was changed to Air India International, and domestic flights were transferred to Indian Airlines. In 2007, the Congress Party-led United Progressive Alliance government decided to merge the two airlines. It plunged the new entity into debt with a large aircraft order a few years ago as it failed to turn a profit since then.
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