A few days ago, Tata Sons emerged as the highest bidder to take over Air India, the national carrier of India, for an enterprise value of INR 18,000 Crores (USD 2.4 Billion approximately). Since then, the timeline was set to hand over Air India to the Tata Group by the end of 2021. On October 11, 2021, a letter of Intent was issued to the Tata Group, confirming the Government of India’s willingness to sell its 100% stake in the airline.

Air India Sold

Today, as per the Department of Investment and Public Asset Management, Government of India, the Share Purchase Agreement has been signed between the Government of India. From the Government/Air India’s side, Air India’s director – finance Vinod Hejmadi and civil aviation ministry joint secretary Satyendra Mishra signed, while from the Tata Group, Supraprakash Mukhopadhyay signed the SPA.

From here, the job is not done yet. A tonne of regulatory clearances will be required, including from the Competition Commission of India before the handover is done in December 2021, or whatever is the timeline set out in the SPA. This will include Air India, Air India Express and AI’s 50% share in AI-SATS. This will exclude non-core assets such as colonies for staff and also the regional carrier Alliance Air which till so far only has an ATR fleet, but will also see the move of Boeing 747s owned by Air India.

Air India/Air India Express currently have a fleet of 141 aircraft, and out of this 99 are owned and 42 are leased. Some of these aircraft are grounded for now due to the inability of the airline to pay for their maintenance. Not just that, the airline group controls 4400 slots domestically and 1800 international landing/parking slots for international operations in India. There are 900 slots at airports abroad, such as London Heathrow.

Bottomline

The clock is ticking and the Tata Group has signed off the Share Purchase Agreement for Air India Group with the Government of India. This kicks off a takeover process which should ideally culminate in the next 8 weeks or so, with Tata Sons completely acquiring Air India.

What do you think will Tata Sons be able to do with Air India once it is in their hands?

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