Companies

Tata Group at the controls of Air India 

Abhishek Law | | Updated on: Jan 27, 2022

People walk past Air India headquaters in Mumbai, India, Thursday, Jan. 27, 2022. Tata Sons, India's oldest and largest conglomerate, on Thursday regained the ownership of the country's debt-laden national carrier Air India that it launched decades ago but was taken over by the government. Tata Sons Chairman N. Chandrasekaran met with Prime Minister Narendra Modi ahead of his meeting with Air India officials to put his company's nominees on a new board. (AP Photo/Rafiq Maqbool) | Photo Credit: RAFIQ MAQBOOL

Proud to welcome Air India back: Tata Sons chief Chandrasekaran; CEO to be named soon

The Tata Group formally took over the management and control of Air India – the country’s iconic, yet debt-laden national carrier; finally ending years of failed privatisation attempts by successive governments.

A new board has taken over the management with the old members of Air India stepping down. Sources say the Tatas are likely to announce a CEO soon.

“@airindiain has been brought to a successful conclusion in a time-bound manner,” Union Aviation Minister Jyotiraditya Scindia said in a Twitter post.

Air India CMD Vikram Dev Dutt welcomes Tata Sons Chairman Natarajan Chandrasekaran on his arrival at Air India office in New Delhi, on Thursday

Air India CMD Vikram Dev Dutt welcomes Tata Sons Chairman Natarajan Chandrasekaran on his arrival at Air India office in New Delhi, on Thursday

The landmark divestment by the Narendra Modi-led government, and the country’s first big ticket privatisation in over two decades, also puts an end to the crores of public money that was being pumped in to keep the carrier afloat. Air India, it was being said, was losing close to ₹ 20 crore a day.

Money received

The DIPAM (or Department of Investment and Public Asset Management) under the Union Ministry of Finance in a statement said, “The disinvestment transaction of Air India (was) successfully concluded today with transfer of 100 per cent shares of Air India to Talace Pvt Ltd (a Tata Sons subsidiary) along with management control. A new Board, led by the Strategic Partner, takes charge of Air India.”

“A debt of ₹15,300 crore has been transferred to the Tatas’ books,” a senior Finance Ministry official said, post the handover.

According to a statement, the Centre has received a consideration of ₹2,700 crore from Talace with them retaining debt of ₹15,300 crore in Air India and AIXL (Air India Express) – the short-haul international carrier.

Share transfer included 100 per cent shares of Air India and its subsidiary AIXL and 50 per cent shares of AI SATS – the ground and cargo handling company.

Alliance Air, the regional arm of Air India, is not a part of the deal. The Centre has already notified the agreement between Air India and the special purpose vehicle, AIAHL for transfer of non-core assets (that were not a part of the deal).

Reviving Air India

The Tata Group in a statement said it was taking over management and control of the airline from Thursday itself.

“We are excited to have Air India back in the Tata group, and are committed to making this a world-class airline. I warmly welcome all the employees of Air India, Air India Express and AI SATS to our Group, and look forward to working together,” N Chandrasekaran Chairman, Tata Sons said.

Chandrasekaran, who met Prime Minister Narendra Modi, minutes before the handing over happened, also thanked the government “for successful completion of this important transaction”.

The group’s subsidiary, Talace was selected as the winning bidder in an auction in October last year when it pegged the airlines enterprise value at ₹ 18,000 crore-odd.

Reiterating that it was a “historic day” for the Tata Group and that the company was “proud to welcome Air India back” Chandrasekaran in a social media post as well as a mail to Air India employees recalled his first flight with the carrier in 1986 - as an intern of TCS - and “how special it felt to be onboard”, the excitement and a “strong sense of belongingness”.

“The entire nation’s eyes are on us, waiting to see what we will achieve together. To build the airline our country needs, we need to look into the future.....I have learned that to preserve what is best about the past, requires constant change. It is by evolving, adapting and embracing the future that we will best honour a glorious history,” he wrote to the employees.

Revival plans awaited

While Air India coming back to the Tatas is a homecoming of sorts, considering it was originally launched by the group’s former Chairman, JRD Tata in 1932, its revival plan is seen as a bumpy road by many.

For one, Air India, despite the legacy it carries including the lucrative routes and landing rights it has across major destinations like London or New York, comes with a highly unionized workforce, and second is its ageing fleet of aircrafts.

Tata Sons, which already owns two other airlines – Vistara ( a JV with Singapore Airlines) and Air Asia India ( a JV with Air Asia) – is yet to spell out exact plans surrounding Air India. Potential options, say aviation analysts could be a merger with any or three of the entities, or keeping Air India independent. The terms of the deal prevent Tata Sons from firing any Air India employee at least for one year.

Once the market leader, Air India’s current market share is about 10 per cent, with IndiGo being the largest low cost domestic carrier. Indian aviation is also preparing for a reboot of Jet Airways while billionaire investor Rakesh Jhunjhunwala’s Akasha Airlines is about to be launched too.

Subtle changes

Meanwhile, subtle changes will be visible in Air India operations beginning Friday, January 28.

In a late evening circular, a new welcome announcement was to me made “after door closure” for all departing flights on January 28.

The announcement asks pilots to welcome guests “aboard a historic flight” which was a special event. A part of the message reads: “Today, Air India officially becomes a part of the Tata Group again, after seven decades.” It goes on to add that guests will be served “with renewed commitment and passion” on every Air India flIght and that they were “Welcome to the future of Air India”.

Published on January 27, 2022
COMMENTS
This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you