Tatas retakes Air India, makes Rs 18,000 cr winning bid
New Delhi, Social Times. 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 in 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.
As per the terms of the transaction, Tatas cannot lay off any employee for one year and can offer a VRS in the second. It is free to do mergers but cannot sell the Air India brand or logo for five years.
While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas' stable - it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
Air India will give it access to a fleet of 117 wide-body and narrow-body aircraft and Air India Express Ltd another 24 narrow-body aircraft besides control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas such as London's Heathrow.
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.
With Air India, Vistara, and Air Asia having current combined market share of 26.9 per cent, the Tata Group will emerge as the second-largest domestic airline after Indigo once the consolidation of the operations of all three airlines is completed.
Air India has been in losses since its 2007 merger with Indian Airlines. It has the dubious distinction of having the highest number of employees on its rolls per aircraft - its 221 employees per aircraft compared with 127 per plane at Lufthansa, 140 at Singapore Airlines and British Airways 178 employees per aircraft.
The transaction with Tatas does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to the government's Air India Asset Holding Limited (AIAHL).