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Its handover complete, Air India returns to Tata home after 69 yrs

🔴 Tata Sons chairman meets PM, tells AI employees ‘nation’s eyes are on us’; government-appointed directors step down

Written by Pranav Mukul | New Delhi |
Updated: January 28, 2022 1:06:53 am
Tata Group takes over Air India, Air India HandoverAir India CMD Vikram Dev Dutt welcomes Tata Sons Chairman Natarajan Chandrasekaran on his arrival at Air India office in New Delhi on Thursday. (Express photo by Anil Sharma)

The Tata Group Thursday regained control of Air India, 69 years after the Mumbai-based conglomerate relinquished its stake in the airline to the Central government.

Ahead of the final handing-over formalities at Airlines House in New Delhi, Tata Sons Chairman N Chandrasekaran called upon Prime Minister Narendra Modi.

In a press release, Tata Sons said: “We philosophically agree with the Prime Minister’s vision for the aviation sector, of making it affordable and ensuring it contributes to boosting ‘Ease of Living’ for citizens.”

Tata Sons chairman N Chandrasekaran with PM Narendra Modi. (Photo: Twitter/@PMOIndia)

The Tata Group, in a Twitter post, tagged Air India and said: “Your arrival was much awaited.” It also posted a photo saying “Welcome back, Air India!”.

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And in an internal letter to Air India employees after the handing over, Chandrasekaran wrote: “My first flight was with Air India in December 1986, and I will never forget how special it felt to be onboard, or the exhilaration as we soared into the sky… today is the beginning of a new chapter. The nation’s eyes are on us, waiting to see what we achieve together. To build the airline our country needs, we need to look to the future.”

The conclusion of the Air India deal also marks a major first step in the Centre’s mega privatisation push.

In October last year, the Tata Group had emerged as winning bidder for 100% of Air India (including the airline’s 100% stake in budget airline Air India Express and 50% stake in ground handling firm AI-SATS), having placed a bid of Rs 18,000 crore. Of this amount, Tatas were to take over Rs 15,300 crore worth of debt and Rs 2,700 crore was to be paid to the government in cash.

“The Air India strategic disinvestment transaction has been completed today with Government receiving a consideration of Rs 2,700 crore from the Strategic Partner (M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd), retaining debt of Rs 15,300 crore in Air India and AIXL and transferring shares of Air India to the strategic partner,” the Ministry of Finance said in a statement.

For the Rs 15,300-crore debt bundled with the airline, sources said a consortium of public sector lenders led by the State Bank of India has approved a proposal to grant term loans to Air India to help the Tata Group retire the high-cost debt.

As of August 31, 2021, the airline had a total debt of Rs 60,000 crore. The remainder of the debt has been transferred to a special purpose vehicle AI Holdings Ltd, along with the non-core assets held by the airline to monetise and repay the debt.

Ahead of the share transfer, one of the final legs of the deal was finalising of Air India’s balance sheet. The final balance sheet, with a cut-off date of January 20, was shared by the airline with the Tata Group Monday.

Prior to the formal transfer of shares, the Ministry of Finance had notified the Central government’s approval to the plan to transfer the debt and assets to the special purpose vehicle, and the share purchase agreement signed between the government and the Tata Group.

At the signing ceremony, in addition to Chandrasekaran and other Tata Group officials, Disinvestment Secretary Tuhin Kanta Pandey, Air India’s CMD Vikram Dev Dutt, Civil Aviation Secretary Rajiv Bansal, and other Air India and government officials were present.

Following the conclusion of the deal, the government-appointed directors on the board of Air India stepped down for the Tata-appointed board to take over.

According to sources, for the time being, the four internal directors of Air India — finance, personnel, commercial and operations — have been retained by the Tata Group.

As per the bidding conditions, the Tata Group will have to retain all employees of Air India for one year from the close of the transaction and can offer a voluntary retirement scheme (VRS) in the second year.

Air India has 12,085 employees – 8,084 permanent and 4,001 contractual. In addition, Air India Express has 1,434. In the next five years, about 5,000 permanent employees will be retiring. Further, the Tata Group cannot transfer the Air India brand or logo for five years, and thereafter can do so only to an Indian entity.

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