Air India was founded by Jehangir Ratanji Dadabhoy Tata as Tata Airlines in 1932. However, the carrier was nationalized to form Air India in 1953. Today, the airline has finally returned to Tata’s fold. Let’s take a look at the events leading up to the deal.
A long time to come
The Indian government had shared its goals of privatizing central public sector companies since 2014. So, in the summer of 2017, the Cabinet Committee on Economic Affairs (CCEA) gave the green light to consider the strategic divestment of Air India. and its five subsidiaries, and a panel was set up for this mission.
The Hindu highlights a notable milestone in March 2018 when the government invited investors to buy a 76% stake in Air India while the state reportedly owns 26%. In addition, the deal would include 100% in Air India Express and 50% in groundhandling service. However, no offers were received and authorities decided to take a slower approach with the sale until the high oil prices at the time normalized.
At the turn of 2020, the government again invited investors, but this time the state was looking to completely sell its stakes. There has been a series of delays in the submission deadline over the years. For example, at the end of last year there was an extension for the government to improve the terms of the sale in an effort to reduce the carrier’s debt.
Concerns escalated in March this year when Hardeep Singh Puri, the then civil aviation minister, said privatization was the only option for Air India, otherwise it would face a shutdown. The airline’s debt, which stood at 60,000 crore ($ 8.28 billion) during this period, was of great concern to officials.
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A full circle
Despite all the delays and potential bidders, the clear suitor has long been regarded as Tata. However, at one point rumors circulated that the group was considering a takeover of Air India with Singapore Airlines. The two companies have reportedly sought to join forces again through their existing company, Vistara.
Nonetheless, Air India received the final offers on September 15. The two bidders were the Tata group and the founder of the low-cost company Spicjet, Ajay Singh.
Ultimately, it was confirmed this week that the airline was returning to Tata, which valued the carrier at 18,000 crore yen ($ 2.39 billion). The company also takes 15,300 crore ($ 2.03 billion) as debt for Air India and pays more than â¹ 2,700 crore ($ 358.5 million) in cash to the government.
What do you think of the sale of Air India? Do you think Tata Sons is the right buyer for the carrier? Let us know what you think of the move in the comments section.