The Union government is making “all efforts” to hand over all operations of Air India to Tata Sons by the end of December, said Secretary Ministry of Civil Aviation Rajiv Bansal on Wednesday. Tata Sons had won the bid for acquiring national carrier Air India for Rs 18,000 crore, on October 8, ending Centre’s attempts to privatise the debt-laden airline.
Earlier, Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey had also said that the transaction of handing over of airlines would be completed by December 2021.
Tata Sons, which originally launched Air India with a namesake branding (Tata Air Services) in 1932, bid for the carrier under its wholly-owned subsidiary Talace Pvt Ltd for Rs Rs 18,000 crore. Air India’s reserve price was fixed after the bids were called to ensure that the bidders do not get to know about the reserve price prior to their bidding.
It ensured utmost confidentiality when it comes to the reserve price. Tata Sons were up against Spicejet promoter Ajay Singh-led consortium who had bid Rs 15,100 crore. The total debt of Air India as of August 31 stands at Rs 61,562 crore.
According to Tuhin Kanta Pandey, the debt of the airline would be taken over by the successful bidder (Tata Sons) is Rs 15,300 crore while the remaining debt of Rs 46,262 crore will go to Air India Asset Holding Limited (AIAHL). Under the divestment conditions, Tata sons will retain Rs 15,300 crore of Air India’s debt and pay Rs 2,700 crore to the government, of the total Rs 18,000 crore price. On October 27, Union Finance Ministry directed all ministries to clear dues of Air India and also instructed them to buy air tickets in cash till further orders. “…the process of disinvestment of Air India and Air India Express is ongoing. Air India has stopped extending the credit facilities on account of the purchase of air tickets. Therefore, all Ministries/ Departments are directed to clear Air India’s dues immediately. Air tickets from Air India may be purchased in cash till further instructions,” read the Ministry of Finance order “Ministries/Departments are directed to bring out these instructions to the notice of their Subordinate offices/ Institutes etc under their administrative control, for compliance,” it added.
The government also informed that the winning bidder – Tata Sons – will retain all employees for one year and the group will need to offer a voluntary retirement scheme if it decides on retrenchment after the period.
“In the second year, if they aren’t retained, they will be offered VRS by the winning bidders,” Rajiv Bansal, Secretary, Civil Aviation told reporters. Bansal informed that gratuity, pension fund and post-retirement medical benefits will also be honoured by the winning bidders. The government has said that the interest of the employees and retired employees would be taken care of in the disinvestment process. The government will divest its 100 per cent stake in Air India, Air India Express and 50 per cent stake in ground handling company AISATS.