Will Air India Employees Get Pension After Tata Buys Air India? Govt In Talks With Tata Group

Reports reveal that the government and Tata Sons have been working on the differences being the frontrunner in purchasing the state-run Air India Ltd.

Air India Acquisition 

Being the front-runner to buy state-run Air India Ltd, Tata Sons Ltd and the government are close to sealing the terms of the purchase.

In doing so, they managed to narrow down their differences on the three key sticking points of pension liabilities, real estate assets and debt, according to the sources.

Although, the final talks between both parties are underway.

Soon, a financial bid will be submitted by the Tata group as early as this month, as per the information provided by sources.

Why Would This Happen?

As we all know about the government’s keenness in selling Air India since it has been surviving on a government bailout.

So far, the airline has failed to turn in an annual profit since it was merged with state-run Indian Airlines in 2007. 

From the Tata group perspective, they already own AirAsia India and Vistara.

So they hope that the purchase of Air India will give it access to lucrative airport slots in India and abroad and a large fleet of aircraft. 

Although, Air India also comes with a huge debt load, a unionized workforce and large pension liabilities.

Air India Workers Pension And Real Estate

In coming years, a large number of Air India’s workers are set to retire.

This makes the change of ownership of the company a sensitive issue for the staff.

They mostly prefer that the government should take care of pension-related matters.

They are also in discussion of the ownership of the vast real estate assets of Air India.

This includes staff quarters and residential colonies, after the control of the airline changes hands. 

In 2019, most of Air India’s real estate assets had been transferred to a special purpose vehicle (SPV) called Air India Assets Holding Ltd.

The initiative was a part of the government’s disinvestment process.

Disinvestment Or Closing Down?

“While Tata Sons are keen to have such assets under its own control, post the acquisition of Air India, many employees may not be keen to see residential premises and other real estate assets of the airline going under the control of a private entity,” said sources.

Currently, they are also in process of finalizing how much of Air India’s enormous debt load the winning bidder will need to absorb is also being discussed. 

As of 31 March 2019, Air India had a net debt of about Rs 58,255 crore. 

Later on, the Rs 29,464 crore of this debt was transferred to the SPV to make the airline deal more attractive.

Now, the Centre wishes to complete the sale of the national carrier at the earliest as the choice is between disinvestment and closing down the airline.