Tata Group may regain control and save struggling Air India

By Backend Office, Desk Reporter
Air India Image
Representational Image

India’s Tata Group is moving closer to regaining control of India’s iconic airline which was founded 87 years ago.

The airline was founded by JRD Tata as Tata Airlines in 1932 and it was taken over 67 years ago by the Indian government as part of the nationalization program.

Tata Group is all set to formally bid for the loss-making carrier as the only eligible suitor before the 31st August deadline.

Tata Group, India’s pre-eminent business house with a rich past, has officially confirmed the news and launched thorough research on Air India.

“Tata Sons is currently evaluating the proposal and will consider a bid after due consideration and at the appropriate time. There is no plan to bring in a financial partner,” said a spokesperson of the Tata Group.

The Tata group currently owns legacy carrier Vistara and low-cost airline Air Asia. The two joint venture airlines operate independently with their respective business models.

Air India, the debt-ridden national carrier, was founded in 1932 by the legendary industrialist-cum-aviator JRD Tata as a subsidiary of Tata Sons Ltd. It remained in operation as Tata Airlines until 1946. The airline became a public limited company after 1946, and was renamed Air India.

Once New Delhi nationalized Air India in 1953, JRD Tata became the chairman of the airline and the carrier thrived under his leadership until he was replaced by the government led by Prime Minister Morarji Desai in 1977.

After abandoning a previous plan to retain a 24 percent minority in Air India, the Indian government has been trying to fully exit the struggling carrier with an accumulated $7.78 billion debt pile-up. The deadline for submitting an interest expression was postponed from March 17 to August 31.

Airline sources said Air India and its subsidiary Air India Express will need bidders to absorb $3.1 billion, or nearly one-third of the total debt. The balance of the debt will be transferred to Air India Assets Holding Ltd, the national carrier’s special purpose fund.

Industry watchers said that if the Tata offer is considered approved, the 90-day handover period would begin and end by November 30 or by December 31 at the most. It is highly possible, in such a scenario, that Tata Group will eventually retake control of Air India by 1 January 2021.

Speculation is also rampant about how Tata Group would restructure its current joint venture aviation undertakings in the likely event of acquiring Air India. Analysts see the possibility of combining AirAsia group stake with Air India to form a single entity.

Tata Group operates Vistara as a joint venture with Singapore Airlines. They also own 51 percent in AirAsia India, a joint venture with Tony Fernandes, a Malaysian entrepreneur who owns the remaining 49 percent.

YOU MAY LIKE