Moneycontrol PRO

Tata Sons wins bid for Air India, official announcement awaited

A panel of ministers has reportedly accepted Tata Sons' proposal to take over Air India

October 01, 2021 / 03:57 PM IST
Air India flight. (Image Source: Shutterstock)

Air India flight. (Image Source: Shutterstock)


The wait is finally over. Tata Sons has won the bid for national carrier Air India, Bloomberg has reported.

Moneycontrol has independently confirmed with sources that Tata Sons is indeed the frontrunner for the bid. "The Tatas have placed the highest bid for Air India," the source said, adding that an official decision on the winning bid will be taken in the next few days.

CNBC TV-18 has reported that the government plans to complete the handover of the airlines to its new owners by December.
Another official told Moneycontrol that a final political nod on the deal is awaited. The political clearance will come in two levels. At one level is the Air India-Specific Alternative Mechanism, which is an empowered group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and others.


Then comes the approval of the Union Cabinet, headed by Prime Minister Narendra Modi. These approvals are just a matter of formality and are expected to be given soon.


Later in the day, the seniormost bureaucrat in charge of the govermment's divestment programme said that a final decision was yet to be taken.


"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken," tweeted Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM).


Moneycontrol has reached out to the Tata Sons and a reply is awaited.

It is also learnt that the Tata Group may be willing to acquire around 15 percent of the airline's total debt.

"The Tata group as part of its bid has also proposed to negotiate and acquire a certain amount, at max 15 percent, of Air India's debt if the government is willing to meet certain requirements set by them," an official told told Moneycontrol.
While the sources did not mention the conditions under which the Tata group may be willing to acquire up to 15 percent of Air India's debt, they did mention that it is a big part of the discussions between the government and the Tata Group.

Flying back in time

The Tatas have a long history with the national carrier. It was JRD Tata who founded the airlines with a small capital of Rs 2 lakh given by a reluctant Sir Dorabji Tata, the then Chairman of Tata Sons. JRD piloted the first flight that inaugurated Indian aviation in 1932. 

Close

JRD’s fascination with aviation started early as a young boy holidaying in Northern France with the family of Louis Bleriot, who was the first to fly across the English Channel. JRD would watch in awe the manoeuvres of Adolph Pegoud, a pilot hired by Bleriot. 

The Tata archives records JRD’s experience flying that first airmail for Air India, then called Tata Airlines, and the early days: "On an exciting October dawn in 1932, a Puss Moth and I soared joyfully from Karachi with our first precious load of mail, on an inaugural flight to Bombay. As we hummed towards our destination at a 'dazzling' hundred miles an hour, I breathed a silent prayer for the success of our venture and for the safety of those who worked for it. We were a small team in those days. We shared successes and failures, the joys and headaches, as together we built up the enterprise which later was to blossom into Air-India and Air-India International."

An annual report of the Directorate of Civil Aviation (DCA) of India from 1933-34 commends the efficiency of the airmail service, particularly for its “100 per cent punctuality” even in rain storms and over difficult terrains. It even suggests that staff from Imperial Airways be deputed to Tatas “to see how it is done”.

In 1946, the aviation division of Tata Sons was listed as Air India and, in 1948, the Air India International was launched with flights to Europe. The international service was among the first public private partnerships in India, with the government holding 49% stake in it, the Tatas having 25% and the public owning the rest.

In 1953, Air India was nationalised. Mircea Raianu’s recent book Tata: The Global Corporation that Built Indian Capitalism records JRD’s shock when the announcement was made.

Raianu writes, “He (JRD) expressed his outrage to (Prime Minister Jawaharlal) Nehru, who was at a loss to understand JRD’s reaction. The prime minister reminded him that ‘as a matter of general policy, we have always thought that transport services of almost all kinds should be State-owned.’”

JRD retained Air India’s chairmanship.

 
Arup Roychoudhury

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