Tatas will get access to over a hundred planes, thousands of trained pilots, crew, lucrative landing and parking slots all around world

TATA Sons will retake Air India - the airline it founded nearly 90 years back - as the Government accepted its winning bid of Rs 18,000 crore to acquire 100 per cent of the debt-laden state-run carrier.

Talace Pvt Ltd, a unit of the holding company of salt-to-software conglomerate, made the winning bid of Rs 2,700 crore cash and Rs 15,300 crore debt takeover, Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management, said at a briefing on Friday.

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.

The transaction is targeted to be closed by December, Pandey said. While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas’ stable and will give it access to more than a hundred planes, thousands of trained pilots and crew, and lucrative landing and parking slots all around the world. The transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to Government’s Air India Asset Holding Limited (AIAHL).

Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was called Tata Airlines then. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe.

The international service was among the first public-private partnerships in India, with the government holding 49 per cent, the Tatas keeping 25 per cent and the public owning the rest. In 1953, Air India was nationalised. This was the third attempt to privatise Air India. With previous attempts since 2017 failing to get any significant interest and after receiving feedback from potential investors, the government in October last year sweetened the bid clause relating to the transfer of Air India’s debt to the new investor, giving bidders flexibility to decide on the quantum of humongous debt they want to absorb.

The bids that came in were made up of 85:15 ratio of debt takeover and upfront cash.

Air India has been in losses ever since its merger with domestic operator Indian Airlines in 2007.

The airline will give the successful bidder control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas.

Besides, the bidder would get 100 per cent of the low-cost arm Air India Express and 50 per cent of AISATS, which provides cargo and ground handling services at major Indian airports. Pandey said seven initial expressions of interest (EoI) were received in December 2020 for buying the Maharaja but only two met the qualifying criteria. Air India and its affiliate companies had a combined debt of Rs 61,562 crore as of August 31. Out of this, Tatas will take over Rs 15,300 crore debt. The remaining Rs 46,262 crore debt will go to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.Civil Aviation Secretary Rajiv Bansal said the bidding conditions provide for Tatas to retain all employees of Air India for one year from the close of the transaction and can offer VRS in the second year.

Air India has 12,085 employees - 8,084 permanent and 4,001 contractual. Besides, Air India Express has 1,434. In the next five years, about 5,000 permanent employees will be retiring, he said. Tatas cannot transfer Air India India brand or logo for five years and thereafter can do so only to an Indian entity.

It is expected that the transaction will be completed by December 2021, he added.