India’s Tata Sons wins bid for national carrier Air India

A scrapped Air India aircraft is seen stuck under a pedestrian overbridge in New Delhi, India, Sunday, Oct. 3, 2021. The plane was reportedly being transported by its new owner who purchased it from the airline. (Kshitiz Kakkar via AP)

NEW DELHI (AP) — Tata Sons, India’s oldest and largest conglomerate, will be the new owner of the country’s debt-laden national carrier Air India, the government announced on Friday.

Its winning bid of 180 billion rupees ($2.4 billion) beat India’s SpiceJet chief Ajay Singh, who offered 151 billion rupees ($2 billion) in his private capacity to acquire the airline, said Tuhin Kanta Pandey, secretary at the Department of Investment and Public Asset Management.

An initial sale attempt by the government in 2018 failed to attract any bidders.

The sale marks the return of Air India to the Tata group, a pioneer in Indian commercial aviation when it first launched the airline in 1932 before it was taken over by the government in 1953.

Ratan Tata, chairman emeritus of Tata Sons, said in a tweet, “The Tata Group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group’s presence in the aviation industry.”

As part of its economic reforms agenda, the government pledged to offload more than a dozen loss-making government-run companies.

In January 2020, the government invited initial expressions of interest in the airline, which operates both domestic and international routes and has accumulated huge losses in the past decade. The government asked potential bidders to enter their bids in April this year.

On Friday, the government told reporters that Tata would absorb 153 billion rupees ($2 billion) of the airline’s more than 615 billion rupees ($8.2 billion) debt burden.

The Tata group is a sprawling collection of nearly 100 companies that includes the country’s largest automaker, the largest private steel company, and a leading outsourcing firm. The companies employ more than 350,000 people around the world. Tata bought Jaguar and Land Rover for $2.3 billion from Ford in June 2008.

It also runs a budget airline, Air Asia India, in cooperation with Malaysian carrier Air Asia Berhad, and full-service carrier Vistara with Singapore Airlines.

Air India carried more than 18 million domestic passengers in 2019, and has suffered from overly bureaucratic management and political interference as privately owned low-cost carriers gained market share. It has been incurring losses since its 2007 merger with a state-owned domestic carrier, Indian Airlines.

The new owner will be taking on a fleet of 121 Air India aircraft and 25 planes from its subsidiary Air India Express, which operates low-cost flights to more than 30 destinations in India, the Middle East and Southeast Asia.

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