iNDICA NEWS BUREAU-
The maharaja has returned home after 69 years. Air India, India’s flag carrier which was nationalized in 1953 by an act of Parliament, is now a private company again.
The handover formalities were completed at Airlines House in New Delhi Jan 27. Tata Sons, holding company of the Tata Group, now owns 100 percent in Air India and its low-fare subsidiary Air India Express and 50 percent in the ground-handling firm AISATS.
In a note to employees after the handover, Tata Sons chairman N Chandrasekaran said, “The nation’s eyes are on us, waiting to see what we achieve together.”
Chandrasekaran recalled his first flight back in December 1986, which was with Air India: “I will never forget how special it felt to be on board, or the exhilaration as we soared into the sky.”
Describing the takeover as the beginning of a new chapter, he added, “To build the airline our country needs, we need to look to the future.” He also hinted at changes in its functioning, saying, “I have learned that to preserve what is best about the past requires constant change. It is by evolving, adapting and embracing the future that we best honor a glorious history.”
The conclusion of the deal marks the first success in the central government’s privatization push. Last October the Tatas won full control of Air India (including its wholly-owned subsidiary budget airline and its 50 percent stake in AISATS) with a bid of Rs18,000 crore (US$2.4 billion). Of this, Rs2,700 crore (US$360 million) was paid to the government while the remaining is debt of Rs15,300 crore (US$2.04 billion) that the Tatas have taken over.
As of Aug 31, 2021, the airline had a total debt of Rs60,000 crore (US$8 billion). The balance debt has been transferred to a special purpose vehicle AI Holdings Ltd along with the airline’s non-core assets. The assets will be monetized to repay the debt.
In a statement, the finance ministry said, “The Air India strategic disinvestment transaction has been completed today with Government receiving a consideration of Rs2,700 crore from the strategic partner (M/s Talace Pvt Ltd, a wholly-owned subsidiary of M/s Tata Sons Pvt Ltd), retaining debt of Rs15,300 crore in Air India and AIXL and transferring shares of Air India to the strategic partner.”
Vikram Dev Dutt, who was appointed chairman and managing director of Air India just a few days ago, resigned along with two government nominees. No official announcement has been made yet about the composition of the new board of directors. The Business Standard newspaper reported that the current directors in charge of finance, commercial, operations and human resources would continue while Nipun Aggarwal, senior vice-president at Tata Sons, Saurabh Agrawal, chief financial officer at Tata Sons, Suprakash Mukhopadhyay, group corporate secretary at Tata Sons, and Eruch Noshir Kapadia, former CFO at Tata Sons have joined the board.
The Tata Group now owns four airlines – Air India, Air India Express, Air Asia India and Vistara, a joint venture with Singapore Airlines. Together, they have about 23 percent market share in India’s aviation sector, making them the second biggest operator after Indigo Airlines. In the international sector, Air India is the largest Indian airline and the only one operating on long-haul routes to Europe and North America.
Air India was founded Oct 15, 1932, as Tata Airlines by JRD Tata and commenced operations as Air India July 29, 1946. It was the first Asian airline to enter the jet age Feb 12, 1960, when it took delivery of its first Boeing 707 aircraft and by 1962 it had become the world’s first all-jet airline. In 1971, Air India bought its first Boeing 747-200B, the Emperor Ashoka, again becoming the first Asian airline to own a jumbo jet. The Emperor Ashoka crashed in the sea off Mumbai Jan 1, 1978, killing all 190 passengers and 23 crew on board.
Air India today has 127 aircraft and flies to 102 destinations in India and abroad. After its merger with the domestic carrier Indian Airlines in 2007, it never made a profit.
