Indian business group "Tata Sons" is in the fray to buy India’s loss-making national carrier, Air India. In the bid, Tata group has an ally in Singapore Airlines, according to reports.
Tata Sons chief N. Chandrasekaran has stated that Chairman Emeritus, Ratan Tata has already discussed the group’s interest in Air India with government officials.
Tata group has historic and emotional ties with Air India. It was Tata Group that launched the airline by the name Tata Airlines in 1932 that later became Air India in 1946 and was nationalized in 1953.
Tata group, while looking for a majority stake in Air India wanted a clean slate. It wants the airline’s losses written off and debt of around Rs50,000 crore reduced.
In 2000, the Tata group and Singapore Airlines had expressed their interest in acquiring up to 40 percent of Air India.
India’s Finance Minister Arun Jaitley said he favored selling the loss-making Air India and added the aviation ministry is looking for possible options in privatizing Air India.
For Tata group, the deal will be useful in many ways given the vast network and large fleet of big aircraft with national carrier of India.
The Tata group and Singapore Airlines jointly launched Vistara in 2015. It is readying to fly international routes from 1918 and needs bigger aircraft. Vistara will gain from Air India’s bigger fleet of large aircraft.
A panel of top officials including civil aviation secretary R.N. Choubey has been working on Air India’s divestment under the Department of Investment and Public Asset Management.
The Union cabinet has to approve the department note before moving into specifics like the level of the stake to be sold. Buying Air India will also offer a great network depth to Singapore Airlines, which is under pressure from rivals like Cathay Pacific, Emirates, and Thai Airways.Employees Divided On Privatization
Meanwhile, Air India pilots have not yet opposed the privatization moves. But they are demanding the immediate release of salary dues of Rs 400 crore before the government takes further steps on stake sale.
They want the airline sold at a fair value and pending dues cleared before the sale. Unions such as Indian Pilots Guild and Indian Commercial Pilots Association have the same stand.
Other employee unions warned the government of scale protests if the national carrier is privatized.
In January 2013, the staff salaries of Air India were cut by 25 percent on an ad hoc basis as financial conditions worsened. Air India owes an estimated Rs 968 crore as employee claims after salaries were rationalized.