Life has come full circle for the Tata Group which has emerged as the winning bidder to take over Air India, an airline that they once started and nurtured before the government decided to nationalize the air carrier in 1953.
In a throwback of the journey the airline has taken so far, Ratan Tata, the Chairman Emeritus of Tata Sons, on Friday tweeted an old photograph of the company’s former Chairman J.R.D. Tata getting down from an Air India aircraft, minutes after Tata Sons won the bid to regain control of the airline.
“Welcome back, Air India!”, Ratan Tata tweeted.
“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,” he said.
“On an emotional note, Air India, under the leadership of Mr JRD Tata, had, at one time, gained the reputation of being one of the most prestigious airlines in the world. Tatas will have the opportunity of regaining the image and reputation it enjoyed in earlier years. Mr JRD Tata would have been overjoyed if he was in our midst today,” Ratan Tata tweeted.
“We also need to recognise and thank the government for its recent policy of opening select industries to the private sector. Welcome back, Air India!,” he said.
It was in 1932 that Tatas’ journey into the aviation sector in India began, which in 1946 led to the renaming of the Tata Airline to Air India after the entity turned public. The airline went out from its hands in 1953 when the government decided to nationalize it.
Under the deal now, Tata Sons will acquire Air India, 50 per cent of Air India-Sats, and Air India Express. The government will get Rs 2,700 crore in cash from the sale. The rest is the government’s debt, which Air India will take over.
Air India employees to be retained for one-year
Air India employees will be safeguarded even after the divestment of the national carrier by December-end.
The announcement came after Tata Sons’ subsidiary Talace emerged as the highest bidder for the national carrier under the divestment process.
Besides Air India, the share purchase agreement (SPA) with Talace will include the Centre’s stake in Air India Express and AISATS.
At present, Air India has a total strength of 12,085 employees, which includes 8,084 permanent staff. Air India Express has 1,434 employees.
According to Civil Aviation Secretary Rajeev Bansal, no employee will be removed for a periiod of one year. In the second year, if an employee has to be removed, a VRS option will be provided.
The employees will be provided gratuity and provident fund benefits. In addition, post-retirement medical benefits will be provided to the employees.
On Friday, Tata Sons’ subsidiary Talace was declared the highest bidder for Air India under the divestment process. It had quoted an enterprise value of Rs 18,000 crore for 100 per cent equity shareholding in Air India along with that of Air India Express and AISATS.
The bid was higher than the consortium led by industrialist Ajay Singh. The consortium had quoted an enterprise value of Rs 15,100 crore.
On its part, the Centre had stipulated a reserve price of Rs 12,906 crore. There were only two bidders in the final stage of divestment.
Notably, Tata Sons was touted to be the front-runner to get hold of the national carrier.
Based on the bid results, the Centre will enter into a share purchase agreement (SPA) with Talace by December end. The decision to enter into the SPA with the Tatas was taken by the empowered Air India Specific Alternative Mechanism, it was announced here by Divestment Secretary Tuhin Kanta Pandey.
“The next step will be to issue the Letter of Intent (LoI) and then sign the share purchase agreement following which the conditions precedent would need to be satisfied by the successful bidder, the company and government,” an official communique said.
“It is expected that the transaction will be completed by December 2021,” it added.