Air India- Acquired by Tata in 18000 Cr

Air India was started by the Tata Group in 1932, but in 1947, as India gained Independence, the government bought 49% stake in AI. In 1953, the government bought the remaining stake, and AI was nationalised.

With economic liberalisation and the growing presence of private players, this dominance came under serious threat. By 2007, Air India was merged with the domestic carrier, Indian Airlines, to reduce losses. But it is the mark of how poorly the airline was run that it has never made a profit since 2007. In fact, government had tried many times to recover the losses, also offered 40% stake and 76% stake in two different attempts but failed.

The latest attempt was started in January 2020, and even though aviation is one of the worst hit sectors due to the pandemic, the government has been able to finally conclude the sale.

The Government of India on October 8 announced the winning bidder for the national carrier Air India. The government’s DIPAM Secretary and the Secretary of Civil aviation addressed a press conference at 4 pm, where they announced that the Tatas won the Air India bid.

Air India will go back to the Tatas after a gap of 68 years as the Government of India approved its bid for the divestment sale. The Tata Sons emerged as the winning bidder at Rs 18,000 crore. The Tata Group outbid a consortium led by SpiceJet CMD Ajay Singh, who had bid Rs 15,100 crore to acquire Air India.

Post-acquisition, the Tata Group will have a 100 percent stake in Air India and a 100 percent stake in its subsidiary the Air India Express, which is a low-cost carrier focused on short-haul international operations, primarily in the Middle East. The deal with the Government of India also gives the Tatas a 50 percent stake in the joint venture Air India SATS (on-ground airport services and cargo handling).

As the debt-ridden carrier returned to the Tata fold, Ratan Tata expressed rejoice over the homecoming by recalling Jehangir Ratanji Dadabhoy Tata, who in 1932 started Tata Airlines which became Air India in 1946. He said: “Mr. JRD Tata would have been overjoyed if he was in our midst today.”

 

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