Tata wins control of Air India again with $2.4 billion offer

Bloomberg

Tata Sons Pvt was selected as the winning bidder for India’s flag carrier, ending decades of attempts to privatise a money-losing and debt-laden airline, and potentially ending years of taxpayer-bailouts that’s kept the company alive.
Tata Sons, which originally launched Air India Ltd with a namesake branding in 1932, bid 180 billion rupees ($2.4 billion) as an enterprise value for Air India, Tuhin Kanta Pandey, the top bureaucrat at India’s Department of Investment and Public Asset Management, said at a briefing. The government aims to complete the transaction by the end of 2021.
The high-profile sale is a boost for Prime Minister Narendra Modi, who has embarked on a bold privatisation plan to plug a widening budget deficit, validating his stand of the state staying away from most businesses. For Tata Sons, Air India adds a third airline brand to its stable, and gives it access to more than a hundred planes, thousands of trained pilots and crew, and lucrative landing and parking slots all around the world.
“It’s a start of the privatisation process. For them to actually pull the trigger, and such a symbolic one, is a good sign,” said Rahul Bajoria, chief India economist at Barclays Plc. “Execution side seems to be getting better.”
Bloomberg News reported last week that the conglomerate’s bid was ahead of an offer from entrepreneur Ajay Singh. The consortium led by Singh, who’s also the chairman of budget carrier SpiceJet Ltd, bid 151 billion rupees, Pandey said. The Tata Group will retain 153 billion rupees of Air India’s debt and pay 27 billion rupees cash to the government, Pandey said. Air India has a fleet of 117 wide-body and narrow body aircraft and Air India Express Ltd. has 24 narrow body aircraft, Tata Group said.
Tata Sons, the holding company for the salt-to-software empire and owner of British luxury carmaker Jaguar Land Rover, is coming back to an asset it started almost 90 years ago. Established by legendary industrialist and philanthropist JRD Tata, who was India’s first licensed pilot, the airline originally flew mail in the 1930s between Karachi in then-undivided, British-ruled India and Mumbai.
Tatas will have to bring in a strong management structure, rationalise routes and augment the fleet in a challenging environment made worse by the coronavirus pandemic, according to Harsh Vardhan, chairman of New Delhi-based Starair Consulting.