Established in 2009, the Mohamed bin Zayed (MBZ) fund has supported projects for conservation of species and subspecies across 170 countries
Beleaguered airline Air India is finally back with the Tatas. The Indian government on Friday announced that the country’s leading business group emerged as the successful bidder, offering Rs180 billion (about Dh8.82 billion) for a 100 per cent stake in the carrier.
Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), the agency in-charge of privatisation, told the media in New Delhi that the Tatas will pay Rs27 billion (Dh1.32 billion) in cash and the rest by way of taking over part of the airline’s debt. Talace Pvt Ltd, a Tata Sons subsidiary, won the bid, he said.
A high-level group headed by Home Minister Amit Shah and including Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia cleared the Tata bid on Monday.
The sale of the ailing airline got delayed after the onset of the Covid pandemic last year. The government had set a reserve price of Rs129.06 billion (Dh6.33 billion) and the Tatas topped the bid overtaking domestic carrier SpiceJet.
Ratan N. Tata, chairman emeritus, Tata group (its market capitalisation is over $300 billion), who has been actively pushing for the acquisition of the airline, started by his predecessor in the group, J.R.D. Tata in 1932, expressed his satisfaction with the deal. “Welcome back, Air India,” he tweeted shortly after the official announcement was made by the government.
“The Tata group winning the bid for Air India is great news!” he said. “While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata group’s presence in the aviation industry.”
The group has a significant role in the Indian aviation sector, operating Vistara, a full-service carrier along with Singapore Airlines, and AirAsia India, with AirAsia group of Malaysia.
Recalling the Tata’s association with the airline, Ratan Tata said: “On an emotional note, Air India, under the leadership of J.R.D. Tata, had, at one time, gained the reputation of being one of the most prestigious airlines in the world. Tatas will have the opportunity of regaining the image and reputation it enjoyed in earlier years.”
He added that his predecessor (J.R.D. Tata was the group chairman before Ratan took over) “would have been overjoyed if he was in our midst today.” He also thanked the Indian government for its recent policy of opening select industries to the private sector.
While the carrier took off as Tata Airlines in 1932, it was renamed Air India about 15 years later. In 1953, the Indian government nationalised the carrier, despite stiff opposition from the Tatas.
Besides the country’s flagship carrier, the Tatas will also take control of Air India Express, the low-cost carrier, and 50 per cent of Air India SATS, a 50:50 joint venture between the airline and SATS Ltd, the Singapore-based food solutions and gateway services provider.
Air India has been sustaining losses since the merger with domestic carrier Indian Airlines in 2007. Its total debt stands at around Rs430 billion (Dh21.09 billion).
According to the Indian government, the airline accumulated losses of over Rs700 billion till March 31, 2020. For the year ended March 31, 2021, its estimated losses added up to about Rs100 billion.
Capa India, the global consultancy, estimates that the airline’s liabilities are likely to surge to $20 billion by 2024-25.
nithin@khaleejtimes.com
Established in 2009, the Mohamed bin Zayed (MBZ) fund has supported projects for conservation of species and subspecies across 170 countries
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