LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The USD2.4 billion divestment of national carrier Air India, which was nationalised in 1953, means the airline is returning to its original owners, the Tata Group. Freny Patel explores the background to this momentous deal

Note: The Tata-Air India deal has been cleared for take-off by the competition authority. The CCI managed to clear the transaction within a fortnight of the Tata Group’s merger filing on 1 December.

The divestment of India’s national carrier has had more than its fair share of turbulence since day one, when the government initiated the privatisation of Air India back in 2017, and witnessed two aborted missions.

The government’s latest drive to sell Air India succeeded possibly after it climbed down on a couple of key contentious issues: It granted the flexibility to bidders to decide on the quantum of Air India debt they were willing to absorb; and the income tax department permitted the successful bidder to carry forward Air India’s losses and set them off against future profits.

The government’s concessions brought immediate results as Tata Sons and SpiceJet founder Ajay Singh bid for the national carrier and, eventually, Tata was named the winning bidder, returning the airline to its original home.

“India will lose a national carrier but the divestment was imperative,” says Anuj Trivedi, a partner at Link Legal who, along with his team at the firm, advised Air India on the transaction. “It is a perfect match for the Tatas, especially since the corporate group knows the Air India structure well, having started the airline.”

Tata has acquired the beleaguered national carrier for INR180 billion (USD2.4 billion). It will take on board INR153 billion of debt, one-quarter of the airline’s total debt, and pay the government INR27 billion in cash.

Cyril Amarchand Mangaldas represented the government of India, while AZB & Partners advised Tata Sons in the Air India divestment.

The sale of Air India to the Tatas comprises the national carrier Air India, the budget airline Air India Express, and Air India SATS Airport Services (AISATS), a joint venture company between Air India and Singapore Airport Terminal Services that provides ground handling services across airports in the country.

An elated Ratan Tata, former chairman of Tata Group, tweeted: “Welcome back, Air India!”.

“The Tatas will have the opportunity of regaining the image and reputation enjoyed in earlier years,” he said in his tweet. “Under the leadership of JRD Tata, Air India was one of the most prestigious airlines in the world, and now the Maharaja will return to Tatas after seven decades.”

While the deal has been sealed, drawing the curtains on the vexed divestment, putting the sale together was a complicated affair.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link