Air India Divestment LIVE: Air India Divestment LIVE: Air India will head back to the Tata Group after decades flying as the national carrier, Department of Investment and Public Asset Management (DIPAM), Secretary, Tuhin Kanta Pandey announced today. Tata Sons will pay Rs 18,000 crore for the Maharaja, outbidding a consortium led by SpiceJet’s Ajay Singh who had bid Rs 15,100 crore. The transaction is expected to be close by end of December this year. The central government had started evaluating the bids for the debt-laden national carrier earlier last week. Reports suggest the Tata Group is the front-runner to win the Maharaja, while SpiceJet’s Ajay Singh is the other bidder competing for the airline. The evaluation of bids was done against an undisclosed reserve price.
The governments, over the years, have tried selling the money guzzling airline but to no avail. The debt-laden carrier has 127 aircraft, controlling 50.64% of the International market share when clubbed with AIXL, among Indian carriers. Air India currently serves 42 international destinations. The government is selling its entire stake in Air India. Tata Group already owns about 84% stake in AirAsia India and 51% in Vistara.
Taxpayers have put in Rs 1,10,276 crore in Air India since 2009-10, DIPAM Secretary said.
Tata Sons will take over Rs 15,000 crore of the total debt currently on Air India’s books, DIPAM secretary said. Post this Air India will have Rs 46,262 crore of debt, which will be taken over by AIAHL.
The complete handover of Air India to the Tata Sons will be around December 2021. DIPAM Secretary said that by December this year, the government will get the consideration and shares will be transferred to Tata Sons.
DIPAM secretary said that a total debt of Rs 46,262 crore will remain after the bidder take over, which will go to AIAHL.
As of March 2021, Air India has a total debt of Rs 46,231 crore, DIPAM Secretary said. Total debt at the end of August this year was Rs 65,562 crore, he added.
Tata Sons have will buy Air India for Rs 18,000 crore from the government, beating SpiceJet’s Ajay Sing who bid Rs 15,100 crore.
DIPAM Secretary Tuhin Kanta Pandey has started his presentation, detailing the process of divesting the national carrier.
The successful bidder will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.
JRD Tata started Air India, then known as Tata Airlines, with an initial investment of Rs 2 lakh crore. The first planes purchased by the company were two second-hand de Havilland Puss Moths. According to an Indian Express report, in the autumn of 1932, in the inaugural flight, Tata himself piloted a single-engine plane carrying 25 kilograms of mail from Karachi to Bombay.
Air India was set up as Tata Airlines by JRD Tata in 1932. Jehangir Ratanji Dadabhoy Tata was the first licensed pilot in India
Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007.
According to the Air India website, the Maharaja owns 26 wide-body aircraft and has leased 23. The flag carrier has a total of 128 narrow-body aircraft of which it owns 70.
As per the Air India Expression of Interest floated by the DIPAM in January last year, Air India has a total debt of Rs 60,074 crore as of March 31, 2019. The buyer would be required to absorb Rs 23,286.5 crore. The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.
Earlier this week, Sir Tim Clark, President of Emirates told Moneycontrol that the sale of Air India will affect their operations. However, he has appreciated the competition. Emirates does not have domestic operations in India.
Tata Group is the front runner for the divestment of Air India, according to former Air India Director Jitender Bhargava. In an interview to Bloomberg TV last week, Jitender Bhargava said that Tata Group is likely to get the government’s nod considering the group is capable of pouring large sums of money into the national carrier.
If sold to Tata Sons, Air India would come back to the salt to software conglomerate after a 68-year gap. Air India was started by the Tatas in 1932 as the Tata Airlines. The same was sold to the government in 1953 by the group.
Ministry of Finance’s Department of Investment and Public Asset Management (DIPAM) will hold a press conference later today and likely announce the winner of the Air India bid.
National carrier Air India could finally find a new home today after years of waiting. The debt-laden airline could head back to the Tata Group or make its way to Ajay Singh of SpiceJet.