Tata Sons will resume control of Air India after bidding $2.4 billion, including equity and debt, the government said on Friday, marking the end of years of struggle to privatise the financially troubled airline.
A successful sale of the loss-making national flag carrier will be a major victory for Prime Minister Narendra Modi as it had cost tax payers an average of nearly $3 million a day for the past decade. It would also bode well for planned stake sales in a slew of state-run firms to bolster government coffers and make India a fully market-driven economy.
Talace Pvt Ltd, a unit of Tata Sons - the holding company for the autos-to-steel Tata conglomerate which owns luxury carmaker Jaguar Land Rover - will acquire 100% of Air India, Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management, said. The deal, which is expected to be finalised by the end of the year, puts Air India back in the hands of the group which founded it as Tata Airlines in 1932 before it was nationalised in 1953.
The bid amount includes Tata taking on $2 billion of Air India's $8.2 billion total debt, resulting in an equity value for the government of only about $400 million. Tata currently operates two airlines - Vistara, India's only other full-service carrier, in a venture with Singapore Airlines
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