Tata Sons subsidiary Talace emerged as the winning bidder for the debt-laden national carrier after quoting an enterprise value of Rs 18,000 crore.
The Cabinet Committee on Economic Affairs (CCEA) - empowered Air India Specific Alternative Mechanism (AISAM) approved the highest price bid of Talace Pvt Ltd, a wholly owned subsidiary of Tata Sons for sale of 100% equity shareholding of Government of India in Air India. The winning bid is for Rs 18,000 crore as enterprise value of the air carrier.
Consequent to the acquisition, the Tatas will own a 100% stake in Air India (a full-service airline operating in domestic and international markets) as also 100% in its subsidiary Air India Express (AIXL) (a low-cost carrier airline that focusses on short-haul international operations especially in the Middle East market) and 50% in the joint venture Air India SATS (airport services on ground and cargo handling). The total permanent and contractual employee strength of Air India and AIXL is 13,500.
The transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to GoI's Air India Asset Holding (AIAHL).
Commenting on the development, N. Chandrasekaran, chairman, Tata Sons said, "At the Tata group, we are delighted to be declared as the winner of the bid for AIR INDIA. This is a historic moment, and it will be a rare privilege for our group to own and operate the country's flag bearer airline. It will be our endeavour to build a world-class airline that makes every Indian proud. On this occasion, I would like to pay tribute to JRD Tata, pioneer of Indian aviation, whose memory we cherish."
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The Tatas will get ownership of iconic brands like Air India, Indian Airlines & the Maharajah. Air India has a fleet of 117 wide-body and narrow-body aircraft and AIXL has a fleet of 24 narrow-body aircraft. A significant number of these aircraft are owned by Air India.
The entire disinvestment process was carried out in a transparent manner. The next step will be to issue the Letter of Intent (LoI) and then sign the share purchase agreement following which, the conditions precedent would need to be satisfied by the successful bidder, the company and government. The transaction is expected to complete by December 2021, India's Ministry of Finance said in a statement.
More than 2/3rd of Air India's consolidated revenues come from the international market. It has a strong footprint across geographies like North America, Europe, and the Middle East with attractive slots & bilateral rights. The Air India frequent flyer program has more than 3 million members.
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