Tata regains Air India control in privatisation victory for Modi (updated)

SunCoke Energy

27/01/2022 11:41

(Adds detail, government comment)
    By Aditi Shah
    NEW DELHI, Jan 27 (Reuters) - India's Tata Group took
control of state-run carrier Air India on Thursday, regaining
ownership of the airline after nearly 70 years and marking a
victory for Prime Minister Narendra Modi's privatisation push.
    The auto-to-steel conglomerate in October won the bid https://reut.rs/3AyAZTz
 to take over Air India in a $2.4 billion equity and debt deal,
ending years of struggle to privatise the financially troubled
airline that was kept afloat using taxpayer funds.
    The Air India strategic disinvestment transaction has been
completed today with the government receiving about $360 million
in equity and Tata taking over more than $2 billion of Air
India's debt, the finance ministry said in a statement.     
    "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 in a statement. 
    The deal includes three entities - full-service carrier Air
India, its low-cost arm Air India Express and AI SATS, which
provides ground-handling and cargo services.
    Tata Group already operates two other airlines - Vistara, in
a joint venture with Singapore Airlines  SIAL.SI , and AirAsia
India, which it operates in partnership with AirAsia Group
 AIRA.KL . But both have yet to make money. 
    The purchase of debt-ridden Air India will give Tata
immediate access to valuable flying rights and landing slots,
but industry executives say it will be an uphill battle https://www.reuters.com/business/aerospace-defense/challenges-abound-tata-draws-up-flight-plan-air-india-2021-10-19
 to turnaround the carrier's financials and service levels.
    The airline, with its maharajah mascot, was once renowned
for its lavishly decorated planes and stellar service championed
by founder JRD Tata. Air India was founded in 1932 and
nationalised in 1953. 
    Since the mid-2000s, however, Air India's reputation has
declined as financial troubles mounted. It flew widebody planes
with business class seats in poor repair and grounded some of
its new Boeing  BA.N  787 Dreamliners to use for spare parts.
Customers faced many delays and staff and suppliers were not
always paid on time.
    Air India's biggest competitive advantage is its ability to
fly non-stop to destinations such as the United States and
Europe, where it enjoys lucrative landing rights and where
foreign carriers such as Emirates can only compete with stopover
options.

 (Reporting by Aditi Shah
Editing by Sanjeev Miglani and David Goodman)
 ((aditi.shah@tr.com; +91-11-4954 8023, +91-11-3015 8023;
Reuters Messaging: twitter: @aditishahsays))