Indian multinational conglomerate, Tata Sons has been selected as the winning bidder for India’s flag carrier, Air India, marking an end to years of struggle to privatize the financially troubled airline.
Tata Sons, which originally founded Air India as Tata Airlines in 1932 before it was nationalized in 1953, was the highest bidder in a government auction, Mr. Tuhin Kanta Pandey, the top bureaucrat at India’s Department of Investment and Public Asset Management, said.
Talace Pvt Ltd, a unit of Tata Sons, the holding company for the autos-to-steel Tata conglomerate which owns luxury carmaker Jaguar Land Rover, will acquire 100 percent of Air India, Mr. Pandey said.
Tata Sons bid $2.4 billion as an enterprise value for Air India. The bid amount includes Tata taking on $2 billion of Air India’s $8.2 billion total debt, resulting in an equity value for the government of only about $400 million.
A successful sale of the loss-making national flag carrier will be a major victory for the Indian government as it had cost taxpayers an average of nearly $3 million a day for the past decade.
The high-profile sale is a boost for Prime Minister Narendra Modi, who embarked on a privatization plan to plug a widening budget deficit, validating his stand of the state staying away from most businesses.
Currently, Tata operates two airlines, Vistara, India’s only other full-service carrier, in a venture with Singapore Airlines as well as budget airline AirAsia India, a venture with Malaysia’s AirAsia Group. Adding Air India will give Tata a combined share of about 27 percent of the country’s domestic aviation market, second only to IndiGo.
With this acquisition, Tata will have an additional 4,400 domestic and 1,800 international slots at Indian airports annually, as well as 900 slots at airports overseas, the most lucrative of which are at London’s Heathrow. The company will also earn 8,000 full-time employees and nearly 120 planes.
Thank you very much for choosing GCC Business News to be an important part of your professional life. You will receive a confirmation e-mail. Please check SPAM or UPDATES folder
