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Tata Sons’ wins bid to buy Air India for ₹18,000 Cr, Air India back home!

Tata Sons’ led Special Purpose Vehicle (SPV) Talace Privately Limited won the bid to acquire Air India Limited’s legendary airline. The bid was won by a sum of Rs. 18,000 crores, in opposition to Ajay Singh led consortium of Spice Jet whose bid was Rs. 15,100.

Tata Sons’ will now be acquiring 100 percent of Air India along with 50 per cent of a ground handling company named AISTS.

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The secretary of the Department of Investment and Public Assets Management, Tuhin Kanta Pandey explained in a detailed project the procedure of disinvestment of Air India. He added that combined debt as of August 31, 2021 was in the amount of Rs. 61,562 crores, out of which Tata Sons would take over a debt of Rs. 15,300 and the remaining would remain with Air India Asset Holding Limited (AIAHL).

This is still awaiting the approval of certain government authorities. The whole deal and transactions would be concluded by December 2021.

In an extremely emotional message, Ratan Tata tweeted a textual image along with a “Welcome Back, Air India.” In the tweet, he said that it was great news on the Tata Group winning the bid for the airline. It also talks about how the rebuilding would take considerable time and effort but optimistically increase the Tata Group‘s presence in the aviation sector and this poses a strong market opportunity.

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It continued on the lines of appreciating J. R. D. Tata who built Air India to become one of the most prestigious airlines in the industry and poses an opportunity for regaining the image. It also included how overjoyed J. R. D. Tata would have been on receiving this news.

Lastly, it acknowledged the Government’s effort in opening up certain sectors to the private players in the industry.

Currently, the Tata Group has its presence as Tata SIA Airlines which is a joint venture between Tata Sons and Singapore Airlines. It operates under the flagship brand name of “Vistara,” which Is a full-service domestic airline company.

Air India Timeline TLDR:

1932: J. R. D. Tata established Tata Air Services to transport mail

1938: Rebranded to Tata Airlines, launched its first domestic flight

1946: Tata Airlines went public with the name “Air India” on July 29, 1946

1948-1950: Expanded its base and services to various locations across the globe

1953: GoI passed Air Corporations Act and purchased a majority stake in Air India. It was restructured into Air India International Ltd. and Indian Airlines for domestic services.

1960: Inaugurated its first Boeing 707-420 Flight and became the first Indian airline to enter the Jet Age.

1977: J. R. D. Tata steps down from the position of chairman

2000-2001: Attempts to reprivatize Air India

2001: Operational MD then, Michael Mascarenhas charged for corruption

2004: Itc launched a low-cost subsidiary named Air India Express

2007: Indian Airlines and Air India got merged together as Air India Limited.

2006-2007: Air India Ltd reported combined losses of ₹7.7 Billion

2011: High debt reported along with huge operating losses

2013: cleared a part of its dues and reported a 20 per cent rise in profits

2017: Govt. approved privatization of Air India

2018: GoI issued EoI to sell a 76 per cent stake in both but failed to sell the airlines

2020: GoI decided to sell 100 per cent of stake in both and released EoI to attract bidders

expert view can tata group revive air india

Maharaja’s journey back home:

On being bought to existence by the world-famous industrialist J. R. D. Tata, under the header of Tata Sons, Air India was initially a mail transferring means of air service and was initially called Tata Air Services only to be renamed to Tata Airlines. Soon it started with its operations in the transportation of people and expanded its base across the globe with base in various cities.

Post that, in 1953, the Government of India introduced the Air Corporation Act which led to change in this airline company. The Government acquired a majority stake in this company and restructured the landscape of the company. It was divided into two airlines- Air India International which was for international travel and Indian Airlines Corporation for domestic travel.

Over the years, back in the days, Air India was a huge hit amongst international travelers and posed a high brand image for Indians. It has always been the symbol of airlines for evacuation with setting a Guinness world record on successfully transporting above 150,000 Indian citizens stranded in Iraq and Kuwait when social and political distress caused violence broke out there.

The 90’s posed the last of Air India and Indian Airlines’ glorious times, after which a slow and steady downfall trend of the Maharaja Airlines was observed. This could have been initiated for various reasons, which cannot be accurately determined. Badmouth of the company was spread when the Operational MD at that point of time, Michael Mascarenhas, was charged for corruption. This was accompanied by the appointment of the top management and managing directors by the company. These personnel was selected by the Ministry of Civil Aviation and many of the chosen ones were from outside the airline sector.

The was added by widespread increase in a high number of airports being labeled as international airports. Still, the major factor attributed to its downfall was the merger of Air India and Indian Airlines in 2007.

Post this, the airlines company observed a steep fall in value and started reporting huge operating losses and high indebtedness over the years. The road map of recovery was structured by the State Bank of India which revolved around selling or leasing their airlines in order to finance debt.

Moreover, in 2012, the Government additionally invested about 32 Billion into Air India. Nevertheless, Air India still remained highly indebted and reported massively increasing losses.

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Ultimately in 2017, the Government tried taking Air India off its hands and attempted to sell a 76 per cent stake of Air India and also issued an expression of interest (EoI), but there was a lack of interest shown by a private firm to acquire Air India Ltd.

Then in 2020, the attempt was made again with the Government releasing expression of interest, but revised it to sell 100 per cent of its shareholding to the private players.

Finally, in September 2021, fresh tenders were issued by the Government for selling the airline company Air India where it went back home with Tata Sons’ special purpose vehicle, Talace Private Ltd. for an amount of Rs. 18,000 Crores.

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