Air India to be handed to Tata Sons this week
India’s central government is expected to hand over Air India (AI, Mumbai Int’l) to its new owner, the conglomerate Tata Sons, by the end of this week, local media have reported citing senior government officials.
The officials said they had been working around the clock to complete all procedures this week and that they would have to work on Republic Day on January 26, a national holiday in India, so that the transfer could be conducted the following day.
“The disinvestment of Air India is now decided to be on January 27, 2022. The balance sheet as it closed on January 20 should have been provided on Monday, January 24, so that it could be reviewed by the Tatas and any changes can be effected on Wednesday,” the flag carrier’s director of finance, Vinod Hejmadi, told employees by email, as quoted by the news agency Asian News International.
He hailed the employees’ “excellent work” and expected their continued cooperation in the run-up to the handover.
Tata entered into a share purchase agreement with the government in October 2021 to buy the 100% stake, which comes together with 100% of low-cost subsidiary Air India Express and 50% of groundhandler Air India SATS, for INR180 billion rupees (USD2.4 billion). The companies will be transferred to Tata Sons special-purpose vehicle Talace Private Limited.
Tata already holds an 83.67% stake in low-cost carrier AirAsia India (I5, Bangalore Int’l) and a 51% shareholding in Vistara (UK, Delhi Int’l), its full-service venture with Singapore Airlines.
Of this sum, the group will pay the government INR27 billion (USD359.5 million) in cash while retaining INR153 billion (USD2.04 billion) to cover the part of the airline’s debt pile the conglomerate agreed to settle. In December, an official was quoted as saying that Air India would repay all of the debt it owes to lessors, airports, fuel suppliers, and banks by the end of this financial year – by March 31, 2022.
The national carrier was originally founded by industrialist and aviator J R D Tata as Tata Airlines (AI, Mumbai Int’l) in October 1932, almost 90 years ago. The government later nationalised it in 1953 and renamed it Air-India (AI, Mumbai Int’l). The move back into private hands will be India’s first privatisation since 2003.
In related news, The Indian Express reported on January 23 that various government departments and ministries continue to owe a total of more than INR2.78 billion (USD37.1 million) to Air India for business trips and VIP flights for senior officials including those for the prime minister and president of India. The last audit for such flights was done on October 7, 2021, the airline said.