Air India Officially Sold For Rs 18,000 Crore To Tata Sons; Sales Agreement Signed

The Centre has signed a share purchase agreement (SPA) with Tata Sons, effectively selling Air India for Rs 18,000 crore.

The SPA is a legal contract between the seller and the buyer.

The deal also includes the sale of Air India Express and ground handling arm AISATS.

The transaction is expected to close by the end of December 2021.

Better Future For National Airline

Civil Aviation Secretary Rajiv Bansal said that the strategic disinvestment of Air India will help further its growth in a professional manner.

Part of its growth will be driven by better utilisation of its wide-body planes and upgradation of in-flight services.

Air India’s fleet comprises 43 wide-body planes, including 27 Boeing 787s.

As aircrafts are better utilised, the number of flying hours it can go will increase.

How It Happened

Talace Pvt Ltd had offered to pay Rs 2,700 crore cash to the central government and take over Rs 15,300 crore of the airline’s debt.

The government had accepted the offer made by the company which is a wholly-owned subsidiary of Tata Sons.

On October 11, a Letter of Intent (LoI) was issued to the Tata Group which sealed the government’s decision to sell 100% of its stake in the national carrier. 

The Race

Tatas outbid SpiceJet promoter Ajay Singh who had offered Rs 15,100-crore and the reserve price of Rs 12,906 crore set by the government.

DIPAM Secretary Tuhin Kanta Pandey said that there were seven bidders in the second round, out of which five were disqualified as they did not meet eligibility requirements

Market Presence Now Bigger

The acquisition has put Tata Group ahead of most of its competitors in the domestic aviation space with a market share of about 27%-35%.

Apart from Air India, the group also includes existing airline ventures AirAsia India and Vistara.

However, IndiGo remains the largest domestic airline with a market share of 52%-58%.

What Next?

Ratan Tata acknowledged the long road ahead in terms of rebuilding the airline.

But it also provides an opportunity to enlarge its presence in the aviation industry.

Air India is now the third airline brand in the Tatas’ stable after AirAsia India (in which it holds majority interest) and Vistara.

The latter is a joint venture with Singapore Airlines Ltd.