Tata Sons wins bid for Air India sale

Air India Sale: Tata Sons has been declared as the winning bidder for the Air India sale on October 8, 2021, said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM). Among the frontrunners to buy Air India, Tata Sons submitted a financial bid worth Rs 18,000 crores. Tata Sons and SpiceJet Chairman Ajay Singh had placed their financial bids for Air India on September 15, 2021.

Air India's divestment was a bold plan by the PM Modi-led government towards the privatization of India’s flag carrier Air India and the second attempt of the government to sell the loss-making national carrier. The Tata Sons submitted bids through its 100 per cent arm Talace Private Ltd and SpiceJet CEO Ajay Singh submitted its bids in his personal capacity along with some investment funds, media reports stated.

Tuhin Pandey, Secretary at the Department of Investment and Public Asset Management (DIPAM) after receiving bids tweeted to inform that financial bids for Air India disinvestment have been received by Transaction Adviser. The process now moves to the concluding stage as September 15 has been fixed for the process and will not be changed.

Who were bidding for Air India?

Tata Sons, who operate Vistara and AirAsia India is the frontrunner in the bidding process for the sale of Air India. The Tata Sons submitted bids through its 100 per cent arm Talace Private Ltd. The shareholders of the Company had approved a fund-raise programme of Rs 40,000 crore via non-convertible debentures to finance acquisitions and invest in businesses.

If Tata Sons emerge as the successful bidder, then Air India will be back in the control of its founders. Tata Group had set Tata Airlines in 1932 which was renamed Air India in 1946. The Indian government took control of Air India in 1953.

SpiceJet CEO Ajay is making his bid in his personal capacity. in the sale of Air India

Air India Privatization: What will the successful bidder get?

The successful bidder from the sale of Air India will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports. The winning bidder will also get 900 slots across airports overseas.

The successful bidder will also get 100 per cent of the low-cost arm Air India Express and 50 per cent of Air India SATS Airport Services Private Limited (AISATS) which offers cargo and ground handling services at major Indian airports.

Other properties such as Airlines House in Delhi, Air India building in Mumbai, Air India’s subsidiaries such as Air India Air Transport Services Limited (AITSL), and Air India Engineering Services Limited (AIESL) will be a part of the deal. The bidder will also get 4 acres of land at Connaught Place in Delhi, various housing societies across Mumbai, Delhi, and other cities for AI employees.

Air India sale: Background

In 2018, the government attempted to sell a 76 per cent stake in Air India but failed. Two years ago, the government trying to retain a 26 per cent stake in the loss-making national carrier was a major hurdle in the disinvestment of Air India. The private sector was apprehensive in the airline privatization process with a government-appointed board member.

The government in its second attempt has sweetened the deal to complete the Air India sale by December 2021.

The government in 2021 is willing to sell its 100 per cent stake in the Air India airline along with two other subsidiaries: low-cost Air India Express and a 50 per cent stake of Air India SATS Airport Services Private Limited (AISATS).

In order to further ease the Air India privatization process, the Central Board of Direct Taxes (CBDT) has also offered tax relief on the transfer of capital assets of Air India to a holding company.

The total debt of Air India has reached Rs 43,000 crores of which Rs 22,000 crores will be transferred to the Air India Asset Holding Limited (AIAHL) and the remaining will be borne by the successful bidder. The government will bear the amount transferred to AIAHL before the airline is transferred to the successful bidder.