Tata Sons wins Air India bid for ₹ 18,000 Crore
- In Reports
- 06:22 PM, Oct 08, 2021
- Myind Staff
The government of India has formally announced that Tata Sons has won the bid to acquire national carrier Air India on Friday. After giving up control of the airline more than half a century ago, a conglomerate that produces salt and software made a winning bid of rupees 18,800 crore to reclaim it.
The winning bidder includes 100 per cent stakes in Air India and its low-cost subsidiary, Air India Express, in addition to 50 per cent stakes in ground-handling company Air India SATS Airport Services Private Limited (AISATS).
DIPAM Secretary Tuhin Kanta Pandey said Tata's special purpose vehicle (SPV) Talace Pvt Limited emerged as the winner. Pandey explained that Air India has a total debt of 61,562 crores as of August 31, 2021, out of which the bidder will take over 15,300 crores. So, ₹ 46,262 crore will be transferred to Air India Assets Holding Limited (AIAHL), he added. AIAHL is a SPV formed by the government.
Rajiv Bansal, Civil Aviation Secretary, stated that the winning bidder will not retrench any employee for a minimum period of one year, and if retrenchments occur after a year, the employee will be offered voluntary retirement. He added that all employees will receive benefits from the Provident Fund (PF).
Bansal also mentioned, "As of today, there are 12,085 employees in Air India out of which 8,084 are permanent and 4,001 are contractual. Besides this, Air India Express has an employee strength of 1,434."
Tata Sons and SpiceJet chairman Ajay Singh (in his private capacity) both submitted bids earlier this month. Tata was reported to have won the bid last month, but Union minister Piyush Goyal played it down by stating at the time that nothing was finalized.
The government invited expressions of interest in December 2020 for divesting Air India. There were four bidders, and only Tatas and Ajay Singh advanced to the final stages.
Over the last decade, Air India has lost over rupees 70,000 crore and the government is losing almost ₹ 20 crore every day. At this juncture, the Narendra Modi government attempted to sell Air India for the second time.
In March 2018, the centre expressed interest in selling 76 percent of the airline but failed to find any buyers because of concerns about the airline's debts. Air India still controls more than 4,400 domestic and 1,800 international landing slots at domestic airports, as well as 900 overseas.
In 1932, when it was founded by JRD Tata, Air India was known as Tata Air Services. During the 1950s, the company became a government enterprise. Until 1977, the company was headed by JRD Tata.
First Asian airline to fly to New York with jet aircraft, Air India started flying to New York in 1960. Currently, the Tata Group operates Vistara in partnership with Singapore Airlines, and AirAsia India in partnership with Malaysia's AirAsia.
Image source: republic world
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