Tatas back in Air India cockpit

The Union government on Thursday transferred its shares in Air India, along with control and management, to Tata Sons subsidiary, Talace, ending a disinvestment process that started five years ago and saw a failed attempt. The airline has been a public sector undertaking from 1953.

The transaction covers Air India, Air India Express and the government’s entire 50% stake in a joint-venture ground handling company AI SATS.


“We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline. I warmly welcome all the employees of Air India to our Group and look forward to working together,” N. Chandresekaran, Chairman, Tata Sons, said. Earlier, he met Prime Minister Modi.

Mr. Chandresekaran’s comment followed the last meeting of the incumbent Board of the airline headed by Secretary, Ministry of Civil Aviation, Rajeev Bansal. Four of the existing Directors on the Board have been retained in the new Board, which will be expanded in the days to come. “The new Board members are awaiting security clearance,” said a person in the know.

In a statement, the Tata Group said that it philosophically agreed with the Prime Minister’s vision of making the aviation sector affordable. The government has a total disinvestment target of ₹1.75 lakh crore for the financial year 2021-2022.

Tata Sons have paid ₹2,700 crore in cash for the airline, along with taking on a debt of ₹15,300 crore. The balance debt of ₹ 62,057 crore has been absorbed by the government. Some non-core assets of Air India with a book value of ₹14,718 crore will also remain with the government. The government has a total disinvestment target of ₹1.75 lakh crore for the financial year 2021-2022.

Watch | How Air India came back to the Tatas

“Formalities have been completed. Air India disinvestment transaction is now closed. The shares have been transferred to Talace. A cash consideration of ₹2,700 crore has been received and the debt of ₹15,300 crore has been accepted [by the new owners],” Secretary, Department of Investment and Public Asset Management, Tuhin K. Pandey told reporters here.

Tatas will get Air India’s fleet of 141 planes, along with ownership of iconic Brands like Air India, Indian Airlines & the Maharajah. As many as 13,500 permanent and contractual employees will also move to the Tata fold and have to be retained at least for one year.

The Tata Group now owns three airlines along with Vistara in which it has a 51% stake and AirAsia India where it owns 84% stake. The three airlines together account for 24% of the market share in the aviation sector.

It was in June 2017 that the Union Cabinet gave its in-principle nod for the disinvestment of Air India. The following year, the government invited bids for a 76% stake in the airline, but failed to attract any buyers. In January 2020, the government launched a fresh effort offering to sell its 100% stake in the airline. An attempt by the Atal Bihari Vajpayee government in 2000-2001 to sell 40% stake in Air India too had failed.

The airline was founded in 1932, when JRD Tata piloted the inaugural flight between Karachi and Bombay. It was then known as Tata Airlines. The government acquired a 49% stake in the carrier in 1948, followed by its nationalisation in 1953. The airline was renamed as Air India International, and domestic flights were transferred to Indian Airlines. In 2007, the United Progressive Alliance government led by Congress party decided to merge the two airlines. This along with a massive aircraft order a few years earlier plunged the new entity into debt as it failed to earn profit ever since.

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