New Delhi, 27/1: In a major development, , years after it was nationalised, as the Narendra Modi government formally handed over the airline to the new owner Tata Sons, completing the privatisation process of a public entity for the first time in 20 years.
The takeover by the salt-to-software conglomerate comes three months after it won the bid quoting Rs 18,000 crore — which includes taking over of Rs 15,300 crore of Air India’s debt and a payment of Rs 2,700 crore in cash. Air India was founded by JRD Tata and was nationalised by the Jawaharlal Nehru government in 1953.
The announcement of full handing over came soon after Tata Sons Chairman N Chandrashekhar met Prime Minister Narendra Modi in the national capital today.
Department of Investment and Public Asset Management Secretary Tuhin Kumar Pandey tweeted, “the strategic disinvestment transaction of Air India successfully concluded today with transfer of 100% shares of Air India to M/s Talace Pvt Ltd along with management control. A new Board, led by the Strategic Partner, takes charge of Air India.”
Civil Aviation Minister Jyotiraditya Scindia said it is “indeed noteworthy” that the disinvestment process of Air India has been “brought to a successful conclusion in a time-bound manner”.
With the new acquisition, the Tatas will be adding one more airline to its fold. It currently operates Vistara in a joint venture with Singapore Airlines and a budget airline AirAsia India with Malaysia’s AirAsia Group. Air India has around 4,400 domestic and 1,800 international landing and parking slots at domestic airports and 900 slots overseas.
On October 8 last year, the government announced M/s Talace Pvt Ltd as the winning bidder of the national carrier. The losing bid of SpiceJet Chairman and Managing Director Ajay Singh quoted Rs 15,100 crore. The reserve price of Rs 12,906 crore was set after the bids were presented.
The bid excludes non-core assets, including land and buildings, worth Rs 14,718 crore and will not be transferred to the Tatas.
While Tatas take over Rs 15,300 crore debts, the government will be taking over the rest of the debts. As on August 31, Air India had a debt of Rs 61,562 crore..
This culminates the government’s fresh attempt since 2017 to sell the national carrier, which had gulped Rs 1.10 lakh crore of taxpayer’s money since 2009-10. It also marks the first privatisation of a government-owned company since 2002. The government had last sold Balco in 2001 and Hindustan Zinc in 2002, which ran into controversy.
As the 2017 attempt failed to get any interested bidder, the government had in October 2020 sweetened the bid clause relating to the transfer of Air India’s debt to the new investor, giving bidders flexibility to decide on the quantum of debt they want to absorb. The bids that came in were made up of 85:15 ratio of debt takeover and upfront cash.
Air India has eight logos that will be handed over to the new bidder but the Tatas cannot transfer it for a period of five years. It can sell it after five years but again with a condition that it cannot be transferred to any foreign entity.
On the employee side, Tatas will retain all employees and nobody will be retrenched for one year. If after they are to be removed, they will be offered a Voluntary Retirement Scheme. Post-retirement medical benefits of the employees will be protected.