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Tata Sons acquires Air India

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Tata Sons acquired Air India for Rs.18000 crore, which is roughly $2,386,872,000 ($2 billion) which the center announced on Friday, Oct. 8, making it so that the conglomerate regained control of the debt-laden airline nearly 70 years after its nationalisation.

In their recent press release they stated “Tata group has emerged as the successful bidder of the divestment process of the national carrier Air India. The Tata group’s holding company, Tata Sons through its wholly-owned subsidiary Talace Pvt Ltd submitted a winning bid of Rs 18,000 Crore as the Enterprise Value of Air India.”

Consequent to the acquisition, the Tatas will own a 100 percent stake in Air India (a full-service airline operating in domestic and international markets) as also 100 percent in its subsidiary Air India Express (a low-cost carrier airline that focuses on short-haul international operations especially in the Middle East market) and 50 percent in the joint venture Air India SATS (airport services on ground and cargo handling). The total permanent and contractual employee strength of Air India and AIXL is 13,500.

“At the Tata group, we are delighted to be declared as the winner of the bid for Air India “This is a historic moment, and it will be a rare privilege for our group to own and operate the country’s flag bearer airline. It will be our endeavour to build a world-class airline that makes every Indian proud. On this occasion, I would like to pay tribute to JRD Tata, pioneer of Indian aviation, whose memory we cherish.”  

The Tatas will get ownership of iconic brands like Air India, Indian Airlines and the Maharajah. Air India has a fleet of 117 wide-body and narrow-body aircraft and AIXL has a fleet of 24 narrow-body aircraft. A significant number of these aircraft are owned by Air India.

Air India provides a unique and attractive international footprint. More than 2/3rd of Air India’s consolidated revenues come from the international market. It is the number one player from India in the international market having a strong footprint across geographies like North America, Europe, and the Middle East with attractive slots and bilateral rights. The Air India frequent flyer program has more than 3 million members.”

Ratan N.Tata also took to twitter revealing the news.

“The transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to GoI’s [Government of India] Air India Asset Holding Limited,” the government said.

Tuhin Pandey, the secretary of the Department of Investment and Public Asset Management, said at a press briefing that as of August 31 this year, Air India had accumulated a debt of Rs 61,562 crores.

“The debt which will be taken by the successful bidder will be Rs 15,300 crores,” he added, according to ANI. “Debt position after debt taken over by the successful bidder will remain Rs 46,262 crores.”

The Centre will receive Rs 2,700 crore from the national carrier’s sale.

The government said that Tata Sons will retain all Air India employees for one year. “If after a year they are to be removed, they will be offered a voluntary retirement scheme,” said Aviation Secretary Rajiv Bansal, which is no surprise as the Tata group has been know for valuing their employees over the years.

Tata Sons Chairperson Natarajan Chandrasekaran described the development as a historic moment,“It will be a rare privilege for our Group to own and operate the country’s flag bearer airline,” he said. “It will be our endeavour to build a world-class airline which makes every Indian proud.”

The board of Tata Sons, the holding company of $103 revenue Tata group, is meeting on Tuesday to discuss plans to raise debt to fund Air India acquisition. The Tata Sons board will also be apprised about the acquisition of Air India for Rs 18,000 crore and the group’s consolidated plans for its airline business.

Sanjayan Karthikeyan

Sanjayan Karthikeyan has always loved super heroes and wants to become a comic book artist/writer. Over the years, he was introduced to Superman who went on to become an inspiration in his life. Superman was the reason he started writing, which has become one of his favorite activities. Karthikeyan just completed schooling and plans on pursuing a career in finance but also wants to pursue Journalism, a new passion of his.

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