Almost 64 years after Air India was taken over by the Central government from Tata Sons, and nationalised, the life may come full circle for the Mumbai-based conglomerate.
The group's Chairman N Chandrasekaran is reported to be in talks with the Central government to buy controlling stakes in the airline, reports a business news channel. The group may also bring Singapore Airlines on board to buy 49 per cent stakes in the national carrier, in case the airline is entirely privatised.
Chandrasekaran, who has shown concern over the airline's debt situation, has been assured by the government that the problem would be taken care of so that the deal becomes lucrative, the report added.
DNA Money has learned that a Chandrasekaran-led Tata Group team had also visited the office of Ministry of Civil Aviation a few weeks ago. This is around the same time when the Centre's think tank, Niti Ayog, had recommended strategic disinvestment of Air India which would allow the Centre to pump more money on priority social sectors. However, why was the meeting held and what all was discussed could not be confirmed by DNA Money.
A source in Air India says that the Tata group had in the past shown interest in operating only on the international routes.
This is apart from having the national carrier's huge pilot and engineering base, including its brand name, which has tremendous recall value, especially among the NRIs. Tata group also holds substantial share in Vistara and AirAsia India.
In a written reply in Rajya Sabha, Union Minister of State for Civil Aviation Jayant Sinha had in April said that Air India is projected to post an operating profit of Rs 300 crore in the current fiscal. He said the carrier's net losses are also reducing gradually on account of the overall improvements in the "operational and financial performance".
Last fiscal, Air India had an operating profit of Rs 105 crore. The national carrier, which has a debt in excess of Rs 50,000 crore, is surviving on fund infusion by the government. The Turnaround Plan (TAP) provides for equity infusion over Rs 30,000 crore in the airline up to 2021 subject to achieving certain milestones.
The airline, first formed by Tata group in 1931, named it as Tata Airline which was later changed to Air India just a year after the country's independence. In 1953, the airline was nationalised by the government. However, Tata's love for the aviation sector never died. In 1990s, when the sector was opened up, Ratan Tata along with Singapore Airlines proposed to start a domestic carrier. But the laws were allegedly manipulated so as to bar foreign carriers from owning any share in the domestic carrier.
...& ANALYSIS
- It’s a positive development for AI as Tata group is showing interest in it again.
- Despite being debt-ridden, AI holds considerable assets in India and across the world.
- The government will have to take a haircut in order to make the deal attractive.
