English News

indianarrative
  • youtube
  • facebook
  • twitter

Tata Group likely to get Govt nod for taking over Air India

Tata Sons, the holding company of Tata Group led by Ratan Tata has emerged as the front-runner for taking over Air India as it has put in a higher bid than SpiceJet promoter Ajay Singh

Tata Sons, the holding company of Tata Group has emerged as the front-runner for taking over Air India as it has put in a higher bid than SpiceJet promoter Ajay Singh, the only other contender for buying the loss-making airline, according to a report in The Economic Times. 

The committee of ministers, formed for the disinvestment of Air India, headed by Home Minister Amit Shah is likely to meet soon to approve the winning bid for the national carrier.

If the Tata bid is finally approved, events will have come full circle for the the Mumbai-based group which owned Air India before it was nationalised 67 years ago.

Last month, Tata Sons and the promoter of low-cost carrier SpiceJet, Ajay Singh, were the two entities that had submitted their financial bids to acquire 100 per cent stake in Air India, which has been put up for sale.

The Economic Times report cited sources as saying that the Tata bid is nearly Rs 3,000 crore more than the reserve price set by the Centre and about Rs 5,000 crore higher than the bid submitted by Ajay Singh. There have been reports in the media that the government has put in a reserve price of Rs 15,000 to 20,000 for airline. However, this has not been officially confirmed.

The Tata Group has much deeper pockets than Ajay Singh and has the capability to pump more money to revive loss-making Air India.

The Tatas currently operate full-service carrier Vistara, in partnership with Singapore Airlines (SIA) and also budget-carrier AirAsia India in which it has a 83.67 per cent.

Even with over 4,480 domestic and 2,738 international airline slots, Air India is running at a loss of over Rs 20 crore every day as it has to service a huge debt burden incurred due to the massive purchase of planes during the UPA government at a time when there was a slump in the airlines industry.

The government’s dilemma has been that it has infuse nearly Rs 650 crore each month merely to keep the airline running.

Air India's total debt has surged significantly over the past two years due to the Covid-19 pandemic. It stands at over Rs 40,000 crore now. The government plans to clear a substantial amount of this debt before handing over the airline with a debt of Rs 23,000 crore.

Also read: Divestment Bound: AI staff to vacate accommodations in 6 months