Handover of Air India to Tata Group May Be Delayed Until January 2022

Some regulatory permissions for the handover have yet to close, and certain formalities have not to be fulfilled. The procedure will be concluded by January.

Highlights:

  • Some regulatory permissions and formalities for the handover are yet to close.
  • Tata will not retain the non-core assets of Air India.
  • No specific date for handover has been announced yet.

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Air India

According to a government official, Tata Group’s takeover of debt-ridden national airline Air India will likely be delayed until January. The procedures are taking longer than expected.

In October, the government accepted the highest proposal for 100% equity shares of Air India and Air India Express, along with a 50% investment in ground-handling business AISATS, from a Tata Sons subsidiary. The government signed the purchase contract with Tata Sons to sell national carrier Air India on October 25 for Rs 18,000 crore.

The government planned to complete the transactions by the end of December 2021, which involved Tatas paying Rs 2,700 crore in cash. Tata’s Group would absorb Rs 15,300 crore of the airline’s debt. Air India has a total debt of Rs 61,562 crore as of August 31, 2021. 75% of the debt or Rs 46,262 crore will be transferred to a particular purpose vehicle AIAHL before handing over the loss-making airline to Tata Group.

According to the SPA, all handover procedures must be closed within eight weeks. However, this deadline can be mutually extended by the buyer and seller, as it is in this case.

Tata may not retain non-core assets of Air India

Some regulatory permissions for the handover have yet to close, and certain formalities have not to be fulfilled, the official said to PTI. According to the official, the procedure will be concluded by January. Another unnamed official explained that the monetary component would arrive after completing the transfer.

Tatas outbid a consortium led by SpiceJet promoter Ajay Singh for Rs 15,100 crore and the government’s reserve price of Rs 12,906 crore to sell its whole share in the airline.

Non-core assets, such as Air India’s Vasant Vihar Housing colony, the Air India Building at Nariman Point in Mumbai, and the Air India Building in New Delhi, would not be retained by the Tatas.

Tatas would receive 141 Air India planes, 42 of which will be leased, and the remaining 99 will be owned.

Tata Group will have access to Air India’s 117 wide-body and narrow-body aircraft, Air India Express Limited’s 24 narrow-body aircraft, and management of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as part of its acquisition of Air India.

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Ria is a lead news writer at Aviation Scoop. She writes from dawn to dusk, reads in the evenings, and draws at some ungodly hours. She loathes human interaction and finds solace in the sweet, musky smell of old books, and rain.

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