Air India's return flight to Tatas may get delayed due to pending approvals

Dates to be cleared after requirements for fulfilling condition precedents met

The handover of Air India to Tata Sons is unlikely to be completed in December, and may see some delay due to pending approvals and processes. 

The requirements for fulfilling condition precedents are yet to be fully met, after which the long stop date will be clear, an official said. The government was looking to hand over Air India to Tata Sons-backed Talace by December-end.

Long stop date is the timeframe during which the buyer and the seller agree to fulfill all condition precedents to complete a transaction. Long stop date is generally 45 days from the day of execution of the transaction and can be extended through mutual agreement between parties. 

A meeting to review the progress of Air India divestment will take place on Monday after which there will be clarity about the handover of Air India and the long stop date, the official said. The meeting would be among officials of the Department of Investment and Public Asset Management (DIPAM) and Ministry of Civil Aviation (MoCA). After clarity over the long stop date, the financial statements as on that date will be prepared in agreement with Tatas, the official said.

The handover of the national carrier to the salt-to-software conglomerate also requires approvals from global competition regulators before closing the transaction, the official quoted above said. On December 20, India’s competition regulator, Competition Commission of India approved the deal.

In October, the government had accepted an offer by Talace, a wholly-owned subsidiary of Tata Sons to pay Rs 2,700 crore in cash and take over Rs 15,300 crore of the national carrier's debt. The transaction involves acquisition of 100 per cent equity share capital of Air India and Air India Express (AIXL) and 50 per cent equity share capital of Air India SATS Airport Services by Talace.

As of August 31, Air India had a total debt of Rs 61,562 crore. About 75 per cent of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle Air India Assets Holding (AIAHL) before handing over the loss-making airline to Tata Group. 

The sale does not include non-core assets, including land and building, valued at Rs 14,718 crore which will be transferred to AIAHL, and will be used to retire the airline’s debt by the government. Unpaid current liabilities worth Rs 15,834 crore, in excess of current and non-current assets, such as fuel bills and other pending dues that Air India owes to suppliers will also be transferred to AIAHL.