The government has officially handed over its stake in Air India to the Tata Group, ushering in a new era at the airline’s helm. In October 2021, the government had signed a share purchase agreement with Tata Group to sell national carrier Air India.
Talace Pvt. Ltd., a subsidiary of Tata Sons, emerged as the winning bidder for the debt-laden national carrier, quoting an enterprise value of INR 18,000 crore as part of the government’s disinvestment process.
The deal was supposed to be completed in December 2021 but finally after a month-long delay, the Tata Group announced today that the transaction for the purchase of Air India from the Government of India (GoI) has been completed. The Tata Group will now formally assume management and control of the historical airline.
According to the agreement, the Tata Group would pay INR 2,700 crore cash and take over INR 15,300 crore of the airline’s debt. It also includes the sale of Air India Express, a low-cost carrier and ground handling arm AISATS.
N Chandrasekaran, Chairman of Tata Sons, met Prime Minister Narendra Modi ahead of the official handover of Air India. “We are delighted that this process is now complete. We are excited to welcome Air India back into the Tata fold. We welcome all the employees of Air India to our Group,” he stated. Tata Group will retain current Air India employees for the first year.
Air India had been running in substantial losses since 2007 when it was merged with the state-owned domestic operator Indian Airlines. It had remained operational so far due to taxpayer-funded bailouts. Over the last decade, more than INR 1.10 lakh crore has been invested in the loss-making airline through cash support and loan guarantees to keep it afloat.
The sale represents a win for the government, which had hoped to sell its entire stake in the airline. It also represents the largest outflow of government-owned assets and companies.