Highlights
- Analysts conclude that Air India would bring in profits for the Tatas if the group knows how to play it right
- To acquire Air India from the government, Tata will pay Rs 18000 crore
- Plans are being made by the Government to hand over the airline to the buyer in another four months.
The Tata Group will take over state-owned Air India, which will mark a very successful end to the bid of the government to privatize the national carrier after failing to sell a majority stake in it in 2018.
Tata will be paying Rs 18,000 crore to the government to acquire Air India. The government plans on handing over the airline to the buyer in another four months.
The Bidders
There were two bidders for Air India. One was, obviously, Tata Group, and the other bidder was the Chairman of SpiceJet, Ajay Singh. The airline will be handed over to Tata within four months and the process will be starting 15 days after.
The carrier’s bids were sought at an enterprise value. A minimum of 15% was going to go to the government and the rest was to be used to reduce the existing debt.
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Air India’s Debts
The total debt on Air India is at Rs 43,000 crore, and there has been an increase of Rs 20,000 crore due to the impact of COVID-19 on the industry, as there was barely any travel or tourism. The Government has planned to transfer the airline to the new owners, i.e., Tata, by absorbing this portion and the renewed debt will be reduced down to Rs 23,000 crores.
According to the analysts, Air India might prove to be beneficial for the Tatas. The new owners are being welcomed with high hopes.
Air India’s History
Air India was established by one of the most well-known industrialists in Indian history, JRD Tata. Tata was also the first licensed pilot of India. The airline flew mail in the 1930s between Karachi. It was founded over 90 years ago.
The airline turned commercial in the 1950s. It became very popular among the wealthy generation. The company was owned by the government at the very same time. The interior designs were made by famous painter Salvador Dali.
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