Tata plans a new vertical to on-board Air India after the share purchase agreement.
The Tata group plans to create a new business vertical to on-board all its holdings in the airline industry, including Air India, following the share purchase agreement. The new vertical will take the group’s interest in Air India Express and AISATS. Currently, Tata has a majority stake in low-cost carrier AirAsia India and full-service airline Vistara.
The group has several verticals, one of which is the group’s interest in tourism and travel, Indian Hotels Company, Vistara and AirAsia India. According to sources, this particular workspace will be divided into airlines and hotel businesses.
A query sent to the Tata Group regarding the divestment remained unanswered. The development assumes significance after Tata Sons subsidiary Tales emerged as the highest bidder for the national carrier as part of the disinvestment process.
Tales had quoted an enterprise value of Rs 18,000 crore for the Centre’s 100 per cent equity stake in Air India along with Air India Express and AISATS.
Of the Rs 18,000 crore, Tales will retain Air India’s total debt of Rs 15,300 crore. The rest will be paid to the Center as cash component. The Center had fixed a reserve price of Rs 12,906 crore.
Based on the bid results announced last Friday, the Center will enter into a share purchase agreement (SPA) with Tales by the end of December.
Tales will get more than 140 aircraft as well as eight people, among other assets such as human resources.
Following the transaction, Tata Sons will have two full-service carriers – Vistara and Air India – as well as two low-cost airlines – Air India Express and Air Asia India – and a ground and cargo handling company, AISATS.
In terms of fleet, Tata will get 117 wide-bodied and narrow-bodied aircraft from Air India and 24 aircraft from Air India Express. A large number of these aircraft are owned by Air India. It will operate these aircraft on more than 4,000 domestic and 1,800 international routes.
Additionally, it will get access to the frequent flyer program of Air India, which has over 3 million members.
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