Tata Group took over the ownership of national carrier Air India on January 27, 2021 with the completion the strategic disinvestment with transfer of 100 per cent shares of Air India to M/s talace Pvt Ltd along with management control. The Strategic Partner (M/s Talace Pvt Ltd is a wholly owned subsidiary of M/s Tata Sons Pvt Ltd.
A new board, led by the strategic partner has taken over the charge of Air India with the completion of the disinvestment process. In October last year, Tata Group won the bid for Air India with a bid amount of Rs 18,000 crore that included a payment of Rs 2,700 crore by Tata group in cash and taking over of Rs 15,300 crore of the airline’s debt. Now Air India has transferred 100% of its share held 50% by Air India and its subsidiary AIXL and 50 per cent by AISATS. In the October 2021 bid the Tatas beat the Rs 15,100-crore offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100 per cent stake in the loss-making carrier.
Earlier, the government had proposed to offload 76 per cent stake and retaining 24 per cent equity share capital of the national carrier as well as transfer the management control to private players, as per the preliminary information memorandum. The bid transaction was to involve Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd., an equal joint venture between the national carrier and Singapore-based SATS Ltd. The government had extended the EoI submission deadline to May 31 from the previous date of May 14 2021. The qualified interested bidders were to be intimated on June 15. But no response was received for the Expression of Interest floated for the strategic disinvestment of Air India.
Tata group is expected to turn around the Air India which was making losses due to its inflexibility in changing itself according to the requirements of a competitive market after many private players were permitted into the aviation sector. Apart from rigid pay and privileges and free entitlements to government dignitaries Air India which was plying into all the uneconomic routes ended up with huge losses. The strategic disinvestment in the firm is likely to resuscitate the pioneering air service provider.
Background
Air India, headquartered in Mumbai and formerly Air-India, airline was founded in 1932 as Tata Airlines. The first scheduled service was inaugurated in 1932 by J.R.D. Tata, flying mail and passengers between Karachi, Ahmadabad, Bombay (now Mumbai), Bellary, and Madras (now Chennai). Later it grew into the flagship international airline of India as in addition to domestic routes, it served routed in southern and eastern Asia, the Middle East, Europe, Africa, Australia, the United States, and Canada.. By 1939 routes had been extended to Trivandrum, Delhi, Colombo, Lahore, and intermediate points. After World War II, in 1946, Tata Airlines was converted into a public company and renamed Air-India Limited.