Tata Acquires Air India for Rs 18,000 Crore

Tata Sons have acquired Air India after they won a bid on Friday. They have acquired the national carrier for Rs.18000 Crore. Apart from 100% stakes in Air India, the winning bid also includes 50% stakes in ground handling company Air India SATS Airport Services Private Limited (AISATS).

Tata Sons and Ajay Singh, Chairman of Spicejet placed the bids.

Tuhin Kanta Pandey, DIPAM Secretary said that Tata's special purpose vehicle (SPV) Talace Pvt Ltd. has emerged as the winning bidder. Four bidders entered the race out of which Tata Sons and Ajay Singh were the only ones to make it to the finals.

Mr. Pandey stated that Air India has a total debt of Rs.61,562 Crore as of August 31, 2021, out of which Rs.15,300 Crore will be taken over by the bidder. The remaining Rs.46,262 Crore will be transferred to Air India Assets Holding Ltd (AIAHL) which is an SPV formed by the government.

Rajiv Bansal, Civil Aviation Secretary said that the bidder who wins will not retrench any employee for at least one year, and if retrenched after a year, they will have to offer Voluntary Retirement Scheme (VRS) to them. Besides, the Gratuity and Provident Fund (PF) will be provided to each and every employee.

He also said, "As of today, there are 12,085 employees in Air India out of which 8,084 are permanent and 4,001' are contractual. Besides this, Air India Express has an employee strength of 1,434".

The current losses of Air India are as high as Rs.70,000 Crore.

This was the second attempt by the Modi government to sell Air India. The first attempt was made back in March 2018 but had no bidders due to the high debts of the airline.

At present, the Tata group operates Vistara Airlines in partnership with Singapore Airlines and AirAsia India in partnership with Malaysia's AirAsia.

Writer - Tanishq Aggarwal

Please feel free to ask anything. We are happy to answer all your questions.