Air India: From employee retention to fleet size- what comes as part of divestment deal?

In a big development the government handed over the national carrier to the Tata Sons and a meeting of the new board is also scheduled. Tata Sons Chairman made the announcement of the formal handover and also met Prime Minister Narendra Modi.   

Talace Private Limited -- a subsidiary of the Tata Group's holding company Tata Sons, on 8 October 2021, won the bid to acquire debt-ridden Air India.

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From employee retention to fleet size, this is what comes as part of the deal:

In October 2021, Tata Group bought Air India from the government at Rs 18,000 cr. In this around Rs 2,700 cr was to be given to the Government, while the remaining Rs 15,300 cr was taken by the Tata Group as debt. Now the Group will have Air India, Air India Express and Vistara under its fold. Tata Group also has a 50 per cent share in Air India Sats.

1. The deal with the government does not include land and buildings, as per the agreement, this report said.
2.  Tata Group will retain all the employees of Air India at least for a year.
3. With the acquisition, Tata Group will have access to a fleet of 117 wide-body and narrow-body aircraft, and 24 narrow-body aircraft of Air India Express.
4. It will get control of 4,400 domestic and 1,800 international landing, and parking slots at domestic airports.
5. Tata Group had surpassed the Rs 15,100 crore-offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100 per cent stake in the loss-making carrier.
6. As of August 31, Air India had a total debt of Rs 61,562 crore. Around 75 per cent of this debt or Rs 46,262 crore will be transferred to a special purpose vehicle AIAHL before handing over the loss-making airline to Tata Group.

While this will be the Centre's first privatisation since 2003-04, Air India will be the third airline brand in the Tatas' stable as it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.

Also Read: Government formally handsover Air India to Tatas; new board to meet today, says Tata Sons Chairman N Chandrasekaran

Air India started suffering losses every year since its merger with Indian Airlines in 2007-08.

A Turnaround Plan (TAP) and a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012. However, the TAP did not work out as expected and Air India continued to reel under losses.

Also Read: Air India: Tatas get loan commitment from SBI-led consortium; from SBI, PNB to BoB, know existing exposure of banks in the national carrier

Over the last decade, more than Rs 1.10 lakh crore has been infused by way of cash support and loan guarantees into Air India to keep it afloat.