Tata Sons have emerged as the winning bidder for Air India, a debt-ridden airline that was nationalised in 1953, media reports said on Friday.
The selection of Tata Sons to lead the 'Maharaja' may seem like history coming full-circle as it was the same group that built India’s first airlines in 1932 and called it the Tata Airlines.
Tata Airlines, which was a brainchild of JRD Tata and a veteran World War I pilot Nevill Vintcent, was renamed Air India in 1946 after it became public.
Difficulties like out-of-date aircrafts, inability to pay its employees and lack of adequate service to passengers added to its continual deterioration. The rise of private airlines like Jet Airways, SpiceJet and IndiGo also added to its woes once they started offering competitive airfares and better services, reported The Hindustan Times.
The salt-to-software conglomerate had submitted the final bid for the airline on September 15, while SpiceJet promoter Ajay Singh too was in the race for the airline. However, government sources have confirmed that Tata Sons submitted a higher offer for acquiring the airline.
Sources said a ministerial panel led by Union Home Minister Amit Shah approved the bid submitted by Tata Sons.
The development comes a day after a report indicated that the government finalised the minimum reserve price for the airline.
The government had finalised the minimum reserve price for the national carrier, based on future cash flow projection, brand value and slots in foreign airports, reported India Today.
Sources indicated that the bid submitted by Tata Sons was Rs3,000 crore more than the minimum reserve price set by the government committee.
Top sources from the Ministry of Civil Aviation said all formalities for the Air India disinvestment process will be completed by December 2021.
With Tata Sons emerging as Air India next owners, this handover could come as a relief for Prime Minister Narendra Modi as the enterprise, for decades, was bleeding the government.
According to a Reuters report, the government was losing ?200 million every day to run the carrier. Air India, so far, has accumulated a debt of ?700 billion or $9.53 billion.
PM Modi intended to sell the government’s entire interest in Air India since voted to power. The loss-making airline has been kept afloat by a bailout since 2012.
A panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate’s bid ahead of an offer from entrepreneur Ajay Singh, reported Bloomberg citing people with knowledge of the matter.
"What was started by JRD Tata is now being completed by Ratan Tata. A homecoming of sorts, the airline founded by JRD Tata, India’s first licensed pilot who piloted Air India’s (then Tata Airlines) first flight in 1932, will now be operated by the Tatas once again," said senior officials.
An official announcement is expected in the coming days, two of the people said.
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