Tata Sons chairman meets PM Modi ahead of Air India handover

Ahead of the most-anticipated handover of government's debt-laden airline Air India to the Tata group, Tata Sons chairman N Chandrasekaran met with Prime Minister Narendra Modi on Thursday. 

The meeting comes after all the government representatives of Air India tendered their resignations earlier today. Civil Aviation Ministry, Air India and Tata Group officials are meeting at the Airlines house and a ceremonial handover of Air India will take place at Air India headquarters in Delhi.

The board meeting to formalise an agreement between Air India and Tata Group regarding the same is also likely to take place later in the day. 

Earlier today, the government notified the agreement between Air India and special purpose vehicle AIAHL for the transfer of non-core assets.

The government had in October last year, inked the share purchase agreement with the Tata Group for the sale of national carrier Air India for Rs 18,000 crore.

Also Read: Tata group gets loan commitment from SBI-led consortium for Air India

The Tata Group is expected to take full control of the airline, it founded in 1932, on Thursday. The cash component of the deal would come once the handover process is completed.

The Tata Group would pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline's debt. The deal also includes sale of Air India Express and ground handling arm AISATS.

The transaction was to be completed by December 2021, but the deadline was later extended till January 2022, owing to longer-than-expected time taken to complete procedural work.

This will mark the return of Air India to the Tata fold after 67 years. The Tata Group had founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.

Also Read: Government likely to hand over Air India to Tata group on Thursday

Besides, non-core assets of Air India, including land and building, valued at Rs 14,718 crore are also being transferred to AIAHL.

Tatas would not get to retain non-core assets such as the Vasant Vihar Housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.

Of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.

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

Air India will give it access to a fleet of 117 wide-body and narrow-body aircraft and Air India Express Ltd another 24 narrow-body aircraft besides control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at airports overseas such as London's Heathrow.

Air India started suffering losses every year since its merger with Indian Airlines in 2007-08. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012. However, the TAP did not work out and Air India continued to reel under losses with the government giving Rs 20 crore/day to keep the airline afloat.

Over the last decade more than Rs 1.10 lakh crore was infused by way of cash support and loan guarantee in the loss making airline to keep it afloat. The airline is suffering losses of Rs 20 crore/day currently.

On a standalone basis, Air India reported a net loss of Rs 5,422.6 crore during the April-September period of the current fiscal ending March 2022.

(With agency inputs)