The decision marks the start of the Center’s privatization program after a hiatus of nearly two decades.
The secretary of the department of investment and management of public assets (Dipam) Tuhin Kanta Pandey and the secretary of civil aviation informed the media about the amount of financial offers received, details of the sale process, status of existing employees, among others details.
Here are some of the key frequently asked questions about the offering:
What was the winning bid?
The government had set a reserve price of 12,906 million rupees for the airline.
The Tata Group had quoted a winning bid of Rs 18 billion to acquire Air India, higher than the reserve price. Of this, Rs 15,300 crore is debt and the remainder Rs 2,700 crore will be in cash.
Meanwhile, the consortium led by SpiceJet promoter Ajay Singh had listed a financial offering amount of Rs 15,100 crore.
When will delivery occur?
The government aims to hand over the airline to the Tata Group by December 2021.
What was Air India’s total debt?
As of August 31, 2021, the airline’s total debt was Rs 61,562 million.
Who approved the winning bid?
A group of ministers consisting of Interior Minister Amit Shah, Finance Minister Nirmala Sitharaman, Trade Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia approved the winning bid by Air India on October 4.
What will happen to existing employees?
The winning bidder will retain all employees. If any employee needs to be laid off, they will be given the option of a voluntary retirement plan (VRS), after the end of the first year after the bidder takes over the airline.
What benefits will be provided to existing employees?
Tata Group will honor bonuses, pension fund, and post-retirement medical benefits for current and past employees.
Free travel for government employees on Air India flight will stop after delivery, free passage for retired employees will be governed by industry practice.
How many employees does Air India have?
Air India has 12,085 employees: 8,084 permanent and 4,001 contractual. In addition, Air India Express has 1,434.
In the next five years, some 5,000 permanent employees will retire, said civil aviation secretary Rajiv Bansal.
Who will pay your outstanding fees?
The outstanding dues of Air India employees, amounting to 1,332 million rupees according to Judge Dharmadhikari’s report, would be paid by the government.
How much is Air India’s debt?
Air India was suffering a loss of Rs 20 million per day.
As of August 31, the debt of the airlines amounted to Rs 61,562 million.
What will happen to Air India Maharaja and other logos?
In total, Air India has 8 logos and all of them will be transferred to Tatas.
For 5 years, these logos cannot be transferred. After 5 years, the logo can be transferred only to Indian people and not to any foreign entity.
When did the privatization process begin?
The divestment process of Air India and its subsidiaries began in June 2017 with the approval ‘in principle’ of CCEA. The first round did not elicit any expression of interest.
How many financial offers were received?
The government has received 7 expressions of interest (EoI) as of December 2020. However, 5 of the bidders had to be disqualified for not meeting the requirements established in the EOI, even after being given the opportunity for clarification.
What will be the next step?
The next step will be to issue the Letter of Intent (LoI) and then sign the share purchase agreement (SPA), after which the successful bidder, the company and the government must comply with the precedent conditions.