Tata Sons wins bid for Air India, official announcement awaited

Dark Sorrow

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The wait is finally over. Tata Sons has won the bid for national carrier Air India, Bloomberg has reported.

Moneycontrol has independently confirmed with sources that Tata Sons is indeed the frontrunner for the bid. "The Tatas have placed the highest bid for Air India," the source said, adding that an official decision on the winning bid will be taken in the next few days.


CNBC TV-18 has reported that the government plans to complete the handover of the airlines to its new owners by December.
Another official told Moneycontrol that a final political nod on the deal is awaited. The political clearance will come in two levels. At one level is the Air India-Specific Alternative Mechanism, which is an empowered group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and others.

Then comes the approval of the Union Cabinet, headed by Prime Minister Narendra Modi. These approvals are just a matter of formality and are expected to be given soon.

Later in the day, the seniormost bureaucrat in charge of the govermment's divestment programme said that a final decision was yet to be taken.

"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken," tweeted Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM).

Moneycontrol has reached out to the Tata Sons and a reply is awaited.
It is also learnt that the Tata Group may be willing to acquire around 15 percent of the airline's total debt.

"The Tata group as part of its bid has also proposed to negotiate and acquire a certain amount, at max 15 percent, of Air India's debt if the government is willing to meet certain requirements set by them," an official told told Moneycontrol.
While the sources did not mention the conditions under which the Tata group may be willing to acquire up to 15 percent of Air India's debt, they did mention that it is a big part of the discussions between the government and the Tata Group.

Flying back in time

The Tatas have a long history with the national carrier. It was JRD Tata who founded the airlines with a small capital of Rs 2 lakh given by a reluctant Sir Dorabji Tata, the then Chairman of Tata Sons. JRD piloted the first flight that inaugurated Indian aviation in 1932.

JRD’s fascination with aviation started early as a young boy holidaying in Northern France with the family of Louis Bleriot, who was the first to fly across the English Channel. JRD would watch in awe the manoeuvres of Adolph Pegoud, a pilot hired by Bleriot.

The Tata archives records JRD’s experience flying that first airmail for Air India, then called Tata Airlines, and the early days: "On an exciting October dawn in 1932, a Puss Moth and I soared joyfully from Karachi with our first precious load of mail, on an inaugural flight to Bombay. As we hummed towards our destination at a 'dazzling' hundred miles an hour, I breathed a silent prayer for the success of our venture and for the safety of those who worked for it. We were a small team in those days. We shared successes and failures, the joys and headaches, as together we built up the enterprise which later was to blossom into Air-India and Air-India International."

An annual report of the Directorate of Civil Aviation (DCA) of India from 1933-34 commends the efficiency of the airmail service, particularly for its “100 per cent punctuality” even in rain storms and over difficult terrains. It even suggests that staff from Imperial Airways be deputed to Tatas “to see how it is done”.

In 1946, the aviation division of Tata Sons was listed as Air India and, in 1948, the Air India International was launched with flights to Europe. The international service was among the first public private partnerships in India, with the government holding 49% stake in it, the Tatas having 25% and the public owning the rest.

In 1953, Air India was nationalised. Mircea Raianu’s recent book Tata: The Global Corporation that Built Indian Capitalism records JRD’s shock when the announcement was made.

Raianu writes, “He (JRD) expressed his outrage to (Prime Minister Jawaharlal) Nehru, who was at a loss to understand JRD’s reaction. The prime minister reminded him that ‘as a matter of general policy, we have always thought that transport services of almost all kinds should be State-owned.’”

JRD retained Air India’s chairmanship.

 

Dark Sorrow

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Tata Group wins Air India disinvestment bid, claim reports; govt says not yet final

Tata Group is believed to have emerged as the top bidder in the Air India disinvestment process marking an end to the government’s long ordeal to sell the national flag carrier. A formal announcement is expected in the coming days.


The government's reserve price of the airline against which the bids were put is believed to be between Rs 15,000 to Rs 20,000 crore. However, there has been no official comment by government stakeholders oon the same. ET Now sources also said that Tata's bid was higher by Rs 3,000 crore than the reserve price and over Rs 5,000 core more than SpiceJet's Ajay Singh, making it the top choice for the deal.


The entire stake sale is expected to be completed by November-December.


The Centre, however, refuted media reports regarding approval of Air India disinvestment, adding the decision will be announced when it is finalised. A tweet by the Department of Investment and Public Asset Management (DIPAM) termed it 'incorrect'.


"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken," tweeted DIPAM Friday afternoon.



It was earlier reported that representatives of the Tata Group and Ajay Singh had met government officials for negotiations. A committee of secretaries (CoS) finalised the reserve price of the airline after a presentation was made on Tuesday.


More than 200 Tata officials including merger specialists from Vistara, AirAsia India, Tata Steel, and Indian Hotels are believed to be part of the process, other than Tata Sons Mergers & Acquisitions (M&A) team, an earlier report in Economic Times said.

The Tata Group may have also sought a sovereign guarantee against any pre-acquisition claim that Air India faces as indemnity in favour of buyer may be limited with respect to time and value.


The deal includes 100% stake in Air India, Air India Express and 50% in Air India SATS Airport Services Pvt Ltd. Air India’s sale is a cornerstone of the government’s disinvestment agenda and is being overseen by Amit Shah-led committee.

This is the second attempt by the government to sell the debt-laden airline. It earlier tried to sell a 76% stake in the carrier which failed to take off as the government wanted to retain 26% in the airline. In the current sale plan, the entire 100% stake in Air India will be transferred to the winning bidder along with its Rs 23,000 crore debt. The remaining debt will be transferred to the state-owned Air India Assets Holdings Ltd (AIAHL), a new company that will house the carrier’s assets such as Air India building in Mumbai, Airlines House in Delhi, land in Delhi’s Connaught Place and various other housing societies in Delhi and other cities.


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Kumata

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I'm glad if its them. Hope they keep the name.
Name itself evokes ridicule and sympathy among travelers. Merge with vistara & let them make it global brand. They have good mix of short & long haul planes and synergies would be better. All they need do is spruce up the service and improve on planes upkeep.. Make sure everything works..and get rid of all sarkari babus...

Now thst Rant is over, IMO, air India will stay. The code share aggrements and prime slots will force them. Would be interesting how they run all 3..

For sure, either Tata shud offload air asia altogether and merge it in vistara or AI. Singapore Airlines was always interested in AI... Had it not for KHANGRESSI, S... Corrupt ministers....
 

Maharaj samudragupt

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Name itself evokes ridicule and sympathy among travelers. Merge with vistara & let them make it global brand. They have good mix of short & long haul planes and synergies would be better. All they need do is spruce up the service and improve on planes upkeep.. Make sure everything works..and get rid of all sarkari babus...

Now thst Rant is over, IMO, air India will stay. The code share aggrements and prime slots will force them. Would be interesting how they run all 3..

For sure, either Tata shud offload air asia altogether and merge it in vistara or AI. Singapore Airlines was always interested in AI... Had it not for KHANGRESSI, S... Corrupt ministers....
Air India is nostalgia, I guarantee you kumata jee if there were no other airlines then air India would have ruled the Indian skies as it did before.
 

Dark Sorrow

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Singapore Airlines was always interested in AI..
Singapore Airlines was only interested in AI routes.
GoI wanted to completely part its hands of AI not just routes.
Routes of AI are its more valuable asset. If they sell routers no one would be interested in buying AI.
 

Tshering22

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Tata can transform it into something positive.
Well, they will need to think of a very desi solution; Singapore Airlines tried to make Vistara into SIA 2.0 with all the high-flying bells and whistles. This cost the airline a lot of money that they failed to recover from the price conscious passengers.

SIA forgets that India is not as high-income a country as their native home and that the nature of the traveler is different. Singaporeans are not even a fraction of the travellers that generate major revenues for their state carrier, whereas Indian travellers are revenue generators not only for India but also for foreign carriers like Emirates, who at one time stated that Indian travellers accounted for 50% of the revenues generated for traffic from Asia to the West.

Instead of mixing the aircraft fleets the way they have with Vistara, TATA should just convert Air India into a full-fledged long-haul operator like Emirates and SIA do. Assuming that TATA does not sell its stake in Vistara, they should transfer the long-haul jets to Air India and medium and short-haul ones to Vistara and create a diversified product.

There is a lot of latent travel that is pent up after COVID and the TATAs have won the bid at the right time. The aviation market in India, especially given the vaccination rates in the country, is going to explode.
 

Kumata

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Singapore Airlines was only interested in AI routes.
GoI wanted to completely part its hands of AI not just routes.
Routes of AI are its more valuable asset. If they sell routers no one would be interested in buying AI.
Don't think so. Routes were never on table.

Tata - SIA was closed to sealing a deal if I remember correctly but tata got pissed off with hefty bribe demand...think this happened in late 90,s. I cud be wrong though... My comments r based on vague remembrance...
 

ajay7322

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@Kumata @Dark Sorrow @Tshering22 @Anandhu Krishna guys, government have refuted news of Tata winning bid it's not final yet.

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ALERT ⚠ - Media reports indicating approval of financial bids by Government of India in the Air India disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken- Secy DIPAM
#airindia


 

Tshering22

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@Kumata @Dark Sorrow @Tshering22 @Anandhu Krishna guys, government have refuted news of Tata winning bid it's not final yet.

=============
=============
ALERT ⚠ - Media reports indicating approval of financial bids by Government of India in the Air India disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken- Secy DIPAM
#airindia


It just got leaked earlier than they had planned. SO this is a typical sarkari way of covering up. Now even Ratan Tata has announced it. As a principal bidder, he won't be joking.

Glad to see that Maharaja is back.
 

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