Tata Sons wins Air India Bid, Likely to take control soon

Tata Sons, the holding company of Indian multinational salt-to-software conglomerate Tata Group, has won the bid to take control of Air India, news agency ANI reported citing sources. Reports say that the Committee of Ministers on the national carrier disinvestment headed by Home Minister Amit Shah has approved the winning bid for the national airline.

What's the story?

A panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate's bid ahead of an offer from entrepreneur Ajay Singh, according to people with knowledge of the matter, who asked not to be identified as the decision isn't yet public. An official announcement is expected in the coming days, two of the people said. A civil aviation ministry spokesman didn't immediately respond to a request for comment. A finance ministry spokesperson couldn't immediately be reached. A representative for Tata Sons declined to comment.

The proposed handover is a key victory for Prime Minister Narendra Modi, who has embarked on a bold privatization plan to plug a widening budget deficit. It also puts an end to a decades-long struggle to offload the money-losing flag carrier. Multiple governments have tried to sell the airline -- which began life as Tata Airlines in 1932 -- but those attempts were either met with political opposition or a lack of interest from potential buyers.

The Tatas have a long history with the national carrier. It was Jehangir Ratanji Dadabhoy (JRD) Tata who founded the airlines with a small capital of Rs 2 lakh given by a reluctant Sir Dorabji Tata, the then Chairman of Tata Sons. A young Jehangir then went on to pilot the first flight that inaugurated Indian aviation in 1932. 

As per the Air India EoI floated by the Department of Investment and Public Asset Management (DIPAM) in January 2020, of the airline's 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.

What's Next?

The successful bidder will mark the return of Maharaja to Tata's fold after 67 years. The government is aiming to sell 100 percent of its stake in the state-owned national airline, including Air India's 100 percent shareholding in AI Express Ltd and 50 percent in Air India SATS Airport Services Private Ltd. Tata Sons 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.