NEW DELHI: The Tata Group, which had founded the nation’s first airline in 1932 before it was nationalised in 1953, officially took over the management and control of the carrier on Thursday after the central government transferred 100% shares of Air India to Talace Pvt Ltd, a wholly owned subsidiary of Tata Sons.
“The Air India strategic disinvestment transaction has been completed with the government receiving Rs 2,700 crore from Talace,” a finance ministry statement read.
The transaction covers three entities — flagship Air India, low-cost carrier Air India Express and ground handling unit Air India SATS Airport Services Pvt Ltd.
The Tatas also took over Rs 15,300 crore of debt in Air India and Air India Express, while the remaining debt of Rs 46,262 crore plus an outstanding of about Rs 15,000 crore towards fuel bills were paid off by the government.
Ahead of the official handover, Tata Sons chairman Natarajan Chandrasekaran called on Prime Minister Narendra Modi.
“We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline. I warmly welcome all the employees of Air India, to our Group, and look forward to working together,” he said in a statement issued later.
Tatas will be retaining over 10,000 employees of Air India. And, as part of the deal, all of them will have to be retained for one year after the takeover.
As the Tata Group’s priority is to turn around the loss-making carrier, there will be a drastic change in the working culture of the staff.
In a letter to Air India employees on Thursday, Chandrasekaran said, “The entire nation’s eyes are on us, waiting to see what we will achieve together. To build the airline our country needs, we need to look to the future.”
The group has already started implementing some changes to attract customers.
On Day One of its takeover, it introduced an ‘enhanced meal service’ in four flights that will operate from Mumbai. Sources said soon after the ownership transfer, a series of advisories were sent to the frontline staff, who interact with passengers.
Meanwhile, a consortium of lenders led by SBI has agreed to provide loans to the Tata Group for the smooth operations of the airline. Sources said Punjab National Bank, Bank of Baroda and Union Bank of India are the other lenders in the consortium.
Bankers said the SBI-led consortium has agreed to grant both term loans and working capital loans depending on the airline's requirements.
All large lenders, including Punjab National Bank, Bank of Baroda, and Union Bank of India, are part of the consortium, they added.
"Many banks have agreed for refinancing of Air Inida debt to Tatas and the process has begun," one of the bankers said.
Existing lenders who do not wish to participate in refinancing of debt to Tatas will get their money repaid through the refinanced amount, the banker said.
Life Insurance Corporation of India (LIC) is among the entities that had given loans earlier to loss-making Air India.
Now, the IPO-bound LIC has decided not to extend more loans to the airline and will not participate in the current funding round led by the SBI, the bankers said.
Talace Private Limited -- a subsidiary of the Tata Group's holding company Tata Sons -- on October 8, 2021, won the bid to acquire debt-ridden Air India.
It had offered Rs 18,000 crore, including cash of Rs 2,700 crore which has now been paid to the government.
The term loans to Talace will help in retiring the high cost borrowings of Air India, the bankers said.
The amount of loans likely to be extended by the consortium could not be immediately ascertained.
"The strategic disinvestment transaction of Air India successfully concluded today with transfer of 100 per cent shares of Air India to M/s talace Pvt Ltd along with management control," DIPAM Secretary Tuhin Kanta Pandey said in a tweet on Thursday.
As of August 31, 2021, Air India had a total debt of Rs 61,562 crore.
Around 75 per cent of this debt or Rs 46,262 crore has been transferred to a special purpose vehicle AIAHL as part of handing over the loss-making airline to Tata Group.
Air India started suffering losses every year since its merger with Indian Airlines in 2007-08.
Over the last decade, more than Rs 1.10 lakh crore has been infused by way of cash support and loan guarantees into Air India to keep it afloat.
With the acquisition, Tata Group will have access to a fleet of 117 wide-body and narrow-body aircraft, and 24 narrow-body aircraft of Air India Express.
Besides, it will get control of 4,400 domestic and 1,800 international landing, and parking slots at domestic airports.
Air India will be the third airline brand in the Tatas' stable as it already holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
Bouquet gets bigger
Tata Group, which already holds a majority interest in AirAsia India and Vistara, will have access to a fleet of 117 wide-body and narrow-body aircraft of Air India and 24 narrow-body aircraft of Air India Express. It will also get control of 4,400 domestic and 1,800 international landing, and parking slots at domestic airports.
Chandra meets Modi
Ahead of the transfer of the airline on Thursday, Tata Sons Chairman N Chandrasekaran called on Prime Minister Narendra Modi (pic). Later, he said the Tata Group is committed to making Air India a world-class airline.
Notable changes
Smart and well-groomed cabin crew, better on-time performance of flights, and enhanced in-flight meal service are some of the measures the Tatas are planning to implement.
Golden age of Air India lies ahead; proud to welcome it back into Tata family: Chandrasekaran
Tata Group chief N Chandrasekaran on Thursday reached out to employees of Air India asking them to work together to build the airline that the country needs, while asserting that the "golden age" of the carrier lies ahead.
In a welcome letter to the employees of Air India, after the Tata Group took over the management and control of the airline, Chandrasekaran, Chairman of Tata Sons, reflected on the airline's "brilliant past" but said the entire nation is now waiting to see what "we will achieve together".
"From the day of the announcement (of Tatas winning the bid), one word has been on everyone's lips: Homecoming. We are proud to welcome Air India back into the Tata family, after all these years," he wrote.
Chandrasekaran further said,"I, like many others, have enjoyed reflecting on stories from the airline's brilliant past. My first flight was with Air India in December 1986, and I will never forget how special it felt to be onboard, or the exhilaration as we soared into the sky."
He, however, said while such memories are wonderful, now is the time to look ahead.
"Today is the beginning of a new chapter. The entire nation's eyes are on us, waiting to see what we will achieve together. To build the airlines our country needs, we need to look to the future," Chandrasekaran said.
Stating that the Tata Group has its "own storied past", he said,"It is evolving, adapting and embracing the future that we best honour a glorious history. I am convinced that the golden age of Air India lies ahead. Our journey towards it starts now. Welcome. And welcome back."
In a separate social media post themed "Looking back, looking forward", Chandrasekaran reiterated that Tata Group is committed to making Air India a world-class airline.
Recollecting his maiden flight, he said,"Like for many of us, my first flight was on Air India in December 1986. I was a young intern then, at Tata Consultancy Services. I vividly recall, even after all this time, how I felt that day."
Terming it a feeling of excitement and a special experience, he said,"There was also a strong sense of belongingness." In conclusion, he wrote,"Today, we are as excited.
The Tata Group looks forward to working with Air India and taking our National Airline to new heights in future.
Passengers to be told about Tata's takeover of Air India during in-flight announcements on Friday
The passengers who will be travelling on Air India flights on Friday will be hearing about the Tata Group's take over of the airline during in-flight announcements, according to an official order.
The Indian government handed over Air India to the Tata Group on Thursday afternoon, after approximately 69 years when it was taken from the conglomerate.
In an order, the operations department told the airline's pilots to make a specific announcement after door closure on every flight departing on Friday.
As per the order, the announcement will be as follows: "Dear Guests, This is your Captain (Name) speaking. Welcome aboard this historic flight, which marks a special event."
"Today, Air India officially becomes a part of the Tata Group again, after seven decades. We look forward to serving you on this and every Air India flight with renewed commitment and passion," the announcement will state, as per the order.
"Welcome to the future of Air India! We hope you enjoy the journey. Thank you," the announcement will further state.
After a competitive bidding process, the government had on October 8 last year sold Air India to Talace Private Limited -- a subsidiary of the Tata Group's holding company -- for Rs 18,000 crore.
Tatas to ensure smartly dressed cabin crew, better on-time performance, enhanced meals at Air India
Smart and well-groomed cabin crew members, better on-time performance of flights, calling passengers as "guests" and enhanced in-flight meal service are some of the measures the Tata Group is focusing on at Air India immediately after taking over the airline on Thursday, sources said.
The employees have been told by the Tata Group that there will be a change in "image, attitude and perception" of Air India, they said.
Cabin crew members have been instructed to address all passengers as "guests" and cabin crew supervisor will have to ensure safety and service standards provided to the guests, they noted.
The crew members will have to be smartly dressed and well-groomed, and there will be grooming executives who will be conducting checks at the airports, they mentioned.
Since on-time performance is extremely important, all endeavours will have to be made by the crew members to ensure that the doors are closed 10 minutes before the flight's departure, they said.
A special audio message by Ratan Tata, Chairman Emeritus of Tata Sons, will also be played in flights and crew will be instructed on when and how to play it, they said.
According to the sources, enhanced meal service will be provided to passengers in select flights in the initial days post the takeover.
This enhanced meal service will be expanded to passengers in all Air India flights in a phased manner, they said.
The "enhanced meal service" was provided on four flights -- AI864 (Mumbai-Delhi), AI687 (Mumbai-Delhi), AI945 (Mumbai-Abu Dhabi) and AI639 (Mumbai-Bengaluru) -- on Thursday, they noted.
The "enhanced meal service" will be served on Mumbai-Newark flight and five Mumbai-Delhi flights on Friday, the sources said.
The government on Thursday handed over Air India to the Tata Group, nearly 69 years after it was taken from the conglomerate.
(With PTI Inputs)