Tata Sons has emerged as the winning bidder for state-run airline Air India at a bid of Rs 18,000 crore, the Government of India announced on Friday, 8 October. Talace, a subsidiary of Tata Sons, will acquire the airline.
"Talace Pvt Ltd of Tata Sons is the winning bidder at Rs 18,000 crore. The transaction is expected to close by the end of December 2021."Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kant Pandey
The government said that the Cabinet Committee on Economic Affairs had instituted Air India Specific Alternate Mechanism which identified the winning bidder for the national airline.
Notably, business tycoon JRD Tata had founded the airline and had piloted the first flight in 1932.
"Welcome back, Air India," former chairman of Tata Sons tweeted on Friday.
"I want to congratulate the winning bidders, Talace Pvt Ltd of Tata Sons. They have a great responsibility. I believe they would be able to serve the people of the country with excellent service," Union Civil Aviation Minister Jyotiraditya Scindia was quoted as saying by news agency ANI.
More Details About the Acquisition
The Tata Sons group's winning bid of Rs 18,000 crore comprises of taking over of 15,300 crore of the debt incurred by the airline, while the remaining Rs 2,700 crore will be paid to the government, the DIPAM Secretary indicated in a press conference.
The total debt of Air India stands at Rs 61,562 crores, as of 31 August.
The reserve price for the bid had been fixed by the government at Rs 12, 906 crore. Tata Sons had submitted the final bid, which was about Rs 3,000 crore higher than the reserve, for the airline on 15 September.
Tata Sons has been directed by the government to retain all employees of Air India for at least one year, news agency PTI reported. The group will be permitted to offer a voluntary retirement scheme (VRS) after the first year.
Spice Jet promoter Ajay Singh has also submitted a bid for the airline, as per reports.
The government loses nearly Rs 20 crore every day to run the national carrier, officials have said, Reuters reported.
Bloomberg News had reported on 1 October that a panel of ministers had accepted a proposal recommending Tata Sons' bid for Air India. The government, had, at the time, refuted the claim.
'JRD Tata Would Have Been Overjoyed': Ratan Tata
"The Tata Group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong marketing opportunity to the Tata Group's presence in the aviation industry," said the group's former chairman Ratan Tata in a statement on Friday.
"On an emotional note, Air India, under the leadership of Mr JRD Tata, had, at one time, gained the reputation of being one of the most prestigious airlines in the world. Tatas will have the opportunity of regaining the image and reputation it enjoyed in earlier years. Mr JRD Tata would have been overjoyed if he was in our midst today."Ratan Tata
Tata Sons chairperson N Chandrasekaran also issued a statement on the acquisition and stated that this was "a historic moment".
"It will be a rare privilege for our Group to own and operate the country's flag bearer airline," the statement read, NDTV reported.
He added that the firm endeavours to build a world-class airline which makes every Indian proud, and paid tribute to JRD Tata.
The Tata Group's reacquisition of the national carrier comes 68 years after the government had purchased a majority stake in Air India in 1953.
(With inputs from Reuters, NDTV and PTI.)