Tata Group takes over debt-laden Air India from government

Tata Sons, the holding company of top Indian conglomerate Tata Group, on Thursday gained control of national carrier Air India, ending the government's two-decade hunt for a buyer for an airline that has been kept afloat with taxpayer money. "We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline," Tata Sons Chairman N. Chandrasekaran said. "I warmly welcome all employees of Air India to our group and look forward to working together." The airline was established by J.R.D. Tata in 1932, only for it to be nationalized in 1953. The conglomerate's offer of 180b rupees ($2.4bi), made through wholly owned subsidiary Talace, in October had emerged as the highest bid for the cash-strapped carrier. Tata's offer surpassed that of the next-highest bidder, SpiceJet founder Ajay Singh, by 29b rupees. The acquisition entailed a cash payment of 27b rupees to the government, while 153b rupees go toward repaying part of the airline's debt. However, 460b rupees of Air India's debt will remain parked with a government-owned entity, backed by real estate assets that may not cover the debt. The deal gave Tata Group full control of Air India, a full-service airline, and Air India Express, a low-cost carrier focused on short-haul international operations, particularly in the Middle East. Tata also got 50% ownership of the airlines' airport services and cargo handling unit, Air India SATS. "The Air India strategic disinvestment transaction has been completed today," the government said Thursday, adding that it received the 27b rupees from Talace.<br/>