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Govt signs share purchase agreement with Tata Sons for Air India strategic sale – Economic Times

The government signed the share purchase agreement with Tata Sons, for divestment of government’s stake and management control in the national carrier, marking the first privatisation in nearly two decades.

“Share purchase agreement signed today by government with the Tata Sons for strategic disinvestment of Air India,” department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey said in a Twitter post Monday.

The SPA follows the letter of intent which was issued to Tata Sons earlier this month, when it was determined as the winning bidder for the airline’s strategic disinvestment. With the signing, the Rs 18,000 crore sale transaction of Air India takes another step towards being handed over to the Tata Group, the first owners of the airline. Regulatory approvals will follow the SPA, before the formal handing over process begins.

Tata Sons will get full control of Air India, its low-cost carrier Air India Express and a 50% stake in ground handling company Air India SATS Airport Services Pvt. Ltd (AISATS). The group will also take over 141 Air India aircraft, of which 42 are leased and remaining are owned. Therefore, it would also take over the capitalised lease liability on account of operating leases of Rs 9,185 crore.

The group will pay up Rs 2,700 crore in cash to the government, while taking on Rs 15,300 crore of the carrier’s debt. The remaining debt of Rs 46,262 crore will be taken over by Air India Asset Holding Ltd (AIAHL), a special purpose vehicle set up by the government to hold half of the airline’s loans, four of its units and non-core assets.

The government is aiming for a quick handover of the airline, since it was paying more than Rs 20 crore per day to run the airline.