Air India gets back its hope with Tata Group

Latest Updated on 31 January 2023

Previous to the Tata Group purchasing the national airline the government has notified the transfer of non-core assets to deal between Air India and special purpose vehicle AIAHL.

The share purchase agreement between the government and the Tata Group for the sale of the national airline Air India for Rs 18,000 crore was inked in October of last year.

The airline, which the Tata Group started in 1932, is expected to be fully under its hands on Thursday. Once the handover process is over the cash part of the contract would come into play.

In addition to paying the airline Rs. 2,700 crores in cash, the Tata Group will also assume Rs. 15,300 crores in debt. The agreement also covers the sale of AISATS, the ground handling business, and Air India Express.

The deal was scheduled to close by December 2021, however, due to longer-than-expected procedural work, the deadline was later extended to January 2022.

After 67 years Air India will once more be a part of Tata once more. In October 1932, the Tata Group formed Air India as Tata Airlines. In 1953, the airline became a nationalized enterprise.

The framework agreement signed by and between Air India Ltd and AI Assets Holding Ltd for the transfer of assets of the national carrier once it ceases to be a public sector firm was notified by DIPAM on January 24 as a step toward the handover process.

The government set up AIAHL in 2019 to hold the debt and non-core assets of the Air India Group.

In addition to non-core assets, original art, and other non-operational assets, four Air India subsidiaries — Air India Air Transport Services Ltd, Airline Allied Services Ltd, Air India Engineering Services Ltd, and Hotel Corporation of India Ltd — were transferred to the SPV.

Last Updated on 02 October 2021

More than half a century after the country's largest conglomerate handed control to the government, Tata Sons Pvt. is likely to retake control of faltering Air India Ltd., putting an end to the government's hold on an airline that defined the country's ambitious dreams for decades.

Prime Minister Narendra Modi has started a major privatization plan to cover a mounting budget deficit, and the scheduled handover marks a key success for him. It also brings an end to a decades-long battle to get the money-losing flag carrier off the ground. Multiple governments have attempted to sell the airline, which was founded in 1932 as Tata Airlines, but failed either to political resistance or a lack of interest from potential bidders.

Given that Tata Group already owns a majority stake in Air Asia India and Vistara, a joint venture with Singapore Airlines Ltd, Air India gives the conglomerate a third airline brand to add to its portfolio. Tata may be the winning bidder, according to the Economic Times. Once completed, the purchase will be a test of the company's aviation expertise. Tata Group has been chastised for not running its existing aviation companies efficiently, despite the fact that they only account for a small fraction of total revenue.