Tata buys back Air India for US$2.4bn 89 years after it founded the airline

Air India ©AirTeamImages

India’s largest conglomerate, Tata Sons (Tata), has acquired the country’s government-owned, debt-ridden carrier, Air India, having outbid SpiceJet to return the carrier to the private sector. It is understood that Tata will pay US$2.4 billion, (INR180 billion), while SpiceJet had offered INR151 billion. Tata will absorb INR153 billion of the carrier’s current debt of INR615 billion.

Air India was founded in 1932 by Tata and was taken over by the Indian Government in 1953. Ratan Tata, the chairman emeritus of Tata Sons, said in a tweet: “The Tata Group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group’s presence in the aviation industry.”

During the previous ten years Air India has run at a substantial loss and has suffered from overly bureaucratic management and political interference as privately owned low-cost carriers gained traction in the market. The carrier operates on both domestic, medium-, and long-haul routes, while also operating budget airline Air Asia India in conjunction with Air Asia Berhad. It also operates Vistara, a full-service carrier, alongside Singapore Airlines. Tata will be acquiring a fleet of 121 Air India aircraft, together with 25 planes from its subsidiary Air India Express, which operates low-cost flights to more than 30 destinations in India, the Middle East and south-east Asia. (US$1.00 = INR75.13 at time of publication.)

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