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. Now, the airline has finally returned to the Tata fold. Let’s take a look at the events leading up to the agreement.
A long time coming
The Indian government had been sharing its goals to have central public sector undertakings go through privatization since 2014. Thus, in the summer of 2017, the Cabinet Committee on Economic Affairs (CCEA) gave the go-ahead to consider strategic disinvestment of Air India and its five subsidiaries, and a panel was set up for this mission.
The Hindu highlights a notable step in March 2018 when the government invited investors to purchase a 76% stake in Air India while the state would hold 26%. Additionally, the agreement would include 100% in Air India Express and 50% in the ground handling department. However, there were no bids received and authorities decided to take a slower approach with the sale until the high oil prices of the time normalized.
At the turn of 2020, the government invited investors once again, but this time, the state was looking to fully give up its holdings. There was a series of delays to the bid deadline over the years. For instance, at the end of last year, there was an extension for the government to improve the terms of the sale in an effort the reduce the carrier’s debt.
Concerns heightened in March this year when Hardeep Singh Puri, the civil aviation minister of the time, expressed that privatization is the only option for Air India or it would face a shutdown. There airline’s debt, which was ₹60,000 crores ($8.28 billion) during this period, was causing great worry for officials.
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A full circle
Despite all the delays and potential bidders, the clear contender was long seen to be Tata. However, at one point there were rumors that the group was mulling a buyout for Air India with Singapore Airlines. The two firms were reportedly looking to join forces once again via their existing venture, Vistara.
Nonetheless, Air India received final bids on September 15th. The two bidders were the Tata Group and low-cost carrier Spicjet’s founder, Ajay Singh.
Ultimately, it was confirmed this week that the airline is returning to Tata, which valued the carrier at ₹18,000 crore ($2.39 billion). The company is also taking ₹15,300 crore ($2.03 billion) as debt for Air India and fork over ₹2,700 crore ($358.5 million) in cash to the government.
What are your thoughts about the sale of Air India? Do you feel that Tata Sons is the right buyer for the carrier? Let us know what you think of the move in the comment section.