Business

Struggling Air India sold to Tata Sons

The government has sold the airline to the company, Struggling Air India sold to Tata Sons which was the highest bidder at nearly $2.4bn (£1.7bn). The government had for years been trying to sell the airline, which has racked up losses worth $9.5bn. But it recently sweetened the deal by making the terms of the debt less onerous for the buyer. It’s still unclear how much debt the Tata group will take on under the new terms. government said it was making a loss of nearly 200m rupees ($2.6m) every day to run the Struggling Air India sold to Tata Sons. In 2001, a previous BJP-led government tried to sell 40% of the stake. A number of foreign airlines, including Lufthansa, British Airways and Singapore Airlines evinced interest, but withdrew when the government made it mandatory for them to partner with an Indian company to make a bid.

In 2018, Mr Modi’s government tried to sell 76% stake and a portion of its debt, but potential buyers found the terms unattractive. In January 2020, the government decided to sell its entire stake in Air India. “There is no choice, we either privatise or we close the airline,” Civil Aviation Minister Hardeep Singh Puri said. By the end of December last year, Air India received two bids – one from Tata Sons and the other from a group of its employees and a US-based investment firm, Interrups.

In September, Ajay Singh, who runs the private budget airline SpiceJet, also bid for the airline in his personal capacity. This time, the government decided to offload its entire stake in Air India, its low-cost arm Air India Express and ground holding subsidiary AISATS. Experts say restructuring Air India’s employee base of 13,000 plus people could be a challenge for the new owners.

More than two-thirds of the airline’s revenues come from its international operations. Air India also owns millions of dollars worth of prime real estate. According to the aviation ministry, its fixed assets – land, buildings, planes – in March last year were worth more than 450bn rupees ($6bn). The airline also has more than 40,000 pieces of art and collectibles, including an ashtray designed and gifted by Spanish surrealist artist Salvador Dali.

The two alliances would be able to form a majority in the 200-seat parliament, garnering 103 seats together to ANO’s 75, according to a projection by Czech TV. A potential partner for ANO could be the far-right, anti-Muslim Freedom and Direct Democracy (SPD) movement led by Tokyo-born entrepreneur Tomio Okamura which scored 10 percent. With most of the almost all ballots counted, turnout had reached nearly 65%, up from 60.84% in the previous general election in 2017. The 67-year-old Babis, a food, chemicals and media mogul, is facing police charges over alleged EU subsidy fraud and the bloc’s dismay over his conflict of interest as a businessman and a politician.

Last weekend, the Pandora Papers investigation showed he had used money from his offshore firms to finance the purchase of property in southern France in 2009, including a chateau.He has denied any wrongdoing and slammed the allegations as a smear campaign. The Czech economy, heavily dependent on car production and exports to the eurozone which the EU member of 10.7 million is yet to join, is on the mend after the Covid-19 lockdowns. But the pandemic and increases in pensions and public sector wages, recently approved by Babis’s cabinet, have made the public finance gap soar.

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