INDIA'S government has notified the agreement between Air India and the special purpose vehicle AIAHL for the transfer of non-core assets, ahead of the national airline's takeover by the Tata Group.
The government had in October last year, inked an agreement with the Tata Group for the sale of national carrier Air India for Rs 180 billion (£1.79 bn).
The Tata Group is expected to take full control of the airline, it founded in 1932.
The Tata Group would pay Rs 27 bn (£270 million) cash and take over Rs 153 bn (£1.52 bn) of the airline's debt. The deal also includes sale of Air India Express and ground handling arm AISATS.
The transaction was to be completed by December 2021, but the deadline was later extended till January 2022, owing to longer-than-expected time taken to complete procedural work.
This will mark the return of Air India to the Tata fold after 67 years. The Tata Group had founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.
As a precursor to the handover process, the Department of Investment and Public Asset Management (DIPAM) on January 24, notified the framework agreement between Air India Ltd and AI Assets Holding Ltd (AIAHL) for the transfer of assets of the national carrier.
AIAHL was set up in 2019, by the government for holding the debt and non-core assets of the Air India group.
Four Air India subsidiaries - Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI) - along with non-core assets, painting and artefacts, and other non-operational assets, were transferred to the special purpose vehicle.
In October last year, Tatas beat the Rs 151 (£1.5 bn) offer by a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 129.06 bn set by the government for the sale of its 100 per cent stake in the loss-making carrier.
As on August 31, 2021, Air India had a total debt of Rs 615.62 bn (£6.12 bn). Around 75 per cent of this debt will be transferred to the special purpose vehicle, AIAHL, before handing over the loss-making airline to the Tata Group.
Besides, non-core assets of Air India, including land and building, valued at Rs 147.18 bn (£1.46) are also being transferred to AIAHL.
Tatas would not get to retain non-core assets such as the Vasant Vihar Housing colony of Air India, Air India Building at Nariman Point, Mumbai, and Air India Building in New Delhi.
Of the 141 Air India aircraft that Tatas would get, 42 are leased planes while the remaining 99 are owned.
While this will be the first privatisation since 2003-04, Air India will be the third airline brand in the Tatas' stable - it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.
(PTI)
