It’s a historic sale in many ways. Tata Sons won, Friday, October 8, the tender for the privatization of Air India. After sixty-eight years of absence, the airline is therefore returning to the bosom of the emblematic conglomerate. “Glad to see you again, Air India!” “, rejoiced, on Twitter, the president emeritus of the group, Ratan Tata. The company, founded in 1932 by the legendary JRD Tata under the name “Tata Airlines”, had been nationalized a few years after the country’s independence in the early 1950s.
By buying Air India, Tata Sons is also putting an end to a long hitherto thwarted privatization process. On two occasions in the past 20 years, the government had sought to privatize the heavily indebted airline, but never succeeded. In 2001, he tried unsuccessfully to sell 40% of his stake in the airline. At the time already, Tata had shown interest, before throwing in the towel.
The last failed privatization attempt dates back to 2018. Indian Prime Minister Narendra Modi wanted to sell 76% of his shares at the time. But no buyer had come forward. A final call for tenders was therefore launched in 2020. This time, the State proposed the total takeover of its stake, including control of the low-cost subsidiary, Air India Express, as well as a stake of 50 % to AISATS, the airport services company.
The acquisition of Air India will cost Tata more than 2 billion euros. The winning bid includes the payment of 310 million euros to the Indian government, as well as the assumption of a quarter of Air India’s debt, or the equivalent of 1.7 billion euros. The rest of the receivables will be transferred to an ad hoc public structure. Tata Sons’ proposal was in competition with the offer of more than 1.7 billion euros made by the consortium led by Ajay Singh, the businessman at the head of the low-cost company SpiceJet.
“I am convinced that the Tata group will restore the glory of Air India and make India proud”, Ajay Singh said, after congratulating his competitor. The “Maharaja of the heavens”, the nickname given to the company once renowned for its pomp and whose mascot is a little Maharaja, has lost much of its luster. The advent of private carriers, then that of low-cost companies, put it at risk. “Of course, rebuilding Air India will require considerable effort, but it will hopefully provide a very solid market opportunity for the Tata Group in the aviation sector”, admitted Ratan Tata in a statement.
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