NEW DELHI, Oct 8 (Businesshala) – Tata Sons will take over Air India after a winning bid of $2.4 billion including equity and debt, the government said on Friday, marking the end of years of struggle to privatize the financially troubled airline. Marking.
A successful sale of the loss-making national flag carrier would be a big win for Prime Minister Narendra Modi as it has cost taxpayers an average of around $3 million a day for the past decade. It will also augur well for the planned stake sale in several state-run companies to strengthen the exchequer and make India a fully market driven economy.
Tales Pvt Ltd, a unit of Tata Sons – the holding company for the auto-to-steel Tata group, which owns luxury car maker Jaguar Land Rover – will acquire 100% of Air India, said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management said.
The deal, which is expected to be finalized by the end of the year, puts Air India back in the hands of the group that had founded it as Tata Airlines in 1932 before nationalizing it in 1953.
The bid amount includes $2 billion out of Tata Air India’s total debt of $8.2 billion, resulting in an equity value of only $400 million that it will pay to the government.
Tata currently operates two airlines – Vistara, India’s only other full-service carrier in a venture with budget airline AirAsia India, a venture with Singapore Airlines (SIAL.SI) as well as Malaysia’s AirAsia Group (AIRA.KL). does.
Ratan Tata, the family scion and emeritus chairman of Tata Sons, said on Twitter that although it would take “a lot of effort to rebuild Air India”, it would provide a strong market opportunity for Tata’s presence in the aviation industry.
“Welcome back, Air India!” He said in a tweet.
The acquisition will give Tata an additional 4,400 domestic and 1,800 international slots annually at Indian airports, as well as 900 overseas airports, the most lucrative of which is London’s Heathrow.
Tata will also get 8,000 full-time employees and about 120 aircraft, mostly older narrowbody Airbus (AIR.PA) aircraft, but also some new widebody Boeing (BA.N) aircraft.
“Air India offers a unique and attractive international footprint,” Tata Sons said in a statement. More than two-thirds of the airline’s revenue comes from international markets such as North America, Europe and the Middle East.
($1 = 74.9740 Indian Rupee)