Tata Group takes over Air India in $2.4 billion deal
The Indian government has agreed to pay three-quarters of Air India’s outstanding debt and relinquish all its shares in the airline. Tata is one of India’s biggest companies.
The Indian government on Friday closed a deal to sell its national airline, debt-laden India Air, to the country’s largest carmaker and steel producer, the Tata Group.
India’s oldest conglemorate will pay 180 billion rupees (roughly €2.1 billion/$2.4 billion) to revive India Air, which has been running in the red since 2009 at a cost of 1.1 trillion rupees to the taxpayer.
What are the main details of the deal?
Under the deal reached with Tata, the government will no longer have a share in the airline and Tata will only have to pay a quarter of Air India’s debt burden of about 615 billion rupees. The debt which Tata is covering will come out of the purchase price to the government.
Tata’s bid beat competition from Spicejet chief Ajay Singh, who offered $2 billion.
Previous attempts to privatize the airline had been deterred by the debt burden and a government desire to keep a share in the airline. India ultimately gave up on retaining a stake and settled for covering only a fraction of the debts in order to offload the losing venture.
‘Tata Air’ goes back to its roots
The winning bid signifies a return of Air India to its founders, which started the airline as Tata Air in 1932, flying mail and passengers from Karachi to Mumbai (or Bombay, as it was then called).
“Welcome back, Air India,” Tata’s current chairman emeritus, Ratan Tata, wrote on Twitter.