Table of Contents
What has happened?
- Tata Sons won the bid to bag debt-laden Air India with a winning bid of Rs 18,000 crore,
- The government said on October 8, a homecoming moment for an airline it founded but gave control to the state.
- An empowered panel of ministers led by home minister Amit Shah gave its approval to the salt-to-software conglomerate’s offer over that of SpiceJet chairman Ajay Singh, the only other bidder in the fray.
- Singh bid in his personal capacity and his bid was around Rs 15,100 crore.
Reserve price?
- The reserve price for Air India, below which the government would not have accepted offers, was fixed at Rs 12,906 crore.
- Pandey said that the deal will be closed by December 2021.
Debt on Air India
- The total debt of Air India as on August 31 was Rs 61,560 crore.
- Debt which will be taken over by Tata will be Rs 15,300 crore while
- Rs 46,262 crore will remain with Air India Asset Holdings Ltd,
- Which is a special purpose vehicle created to retain the non-core assets, land and the debt of Air India which Tata will not be taking on.
significance
- Selling Air India, which has not made profits in 15 years, was a vital piece in the government’s ambition to privatise assets.
- Finding a buyer was tough because the airline— nicknamed Maharaja—has long struggled to stay aloft, was steeped in losses and bruised by competition.
- Air India has a total of 12,085 employees among which 8,084 are permanent and 4,001 are contractual.
- Air India Express has 1,434 employees.
Good deal for Tata?
- For the Tatas, despite the baggage of a bloated workforce and debt,
- Air India offers some prized aviation assets.
- The Tatas get access to slots at busy foreign airports, lucrative destinations such as the Gulf thanks to bilateral flying rights between India and foreign nations,
- Membership to the Star Alliance global network, a solid mix of narrow body and wide-body planes and a trained workforce.
- All these give Tata Sons formidable air power because of the majority stakes it owns in budget airline AirAsia India and full-service carrier Vistara.
- In one stroke, the Tatas get access to aviation assets which otherwise would have taken years and boatloads of money for Vistara to build.
- The deal also packages Air India’s profitable low-cost arm Air India Express and 50% of AISATS, which offers cargo and ground handling services at major Indian airports, to the Tatas.
- Tata Sons will get control of Air India’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports,
- As well as 900 slots at overseas airports.
Q) What is the FDI limit in the Telecom sector through automatic route?
- 26%
- 49%
- 74%
- 100%
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