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Tata Group takes over Air India for US$ 2,4 billion; airline returns to its original founders

The winning bid means Air India returns to its founders, which started the airline as Tata Air in 1932, flying mail and passengers from Karachi to Mumbai

The Tata Group is taking over India's flag carrier Air India, following an agreement to pay US$ 2,4 billion. The airline has been losing money at the rate of a billion dollars since 2009, and under the deal Tata will only pay a quarter of the company's total debt.

 Previous attempts to privatize the airline had failed because of the debt burden and the government's insistence in keeping a share in Air India. But finally the government gave up its intention and accepted the sale's terms to offload the losing company and accumulating burden. In the bid, Tata beat Spicejet chief Ajay Singh, who offered US$ 2 billion.

The winning bid means Air India returns to its founders, which started the airline as Tata Air in 1932, flying mail and passengers from Karachi to Mumbai.

“Welcome back, Air India,” Tata's current chairman emeritus, Ratan Tata, wrote on Twitter.

Though it “would take considerable effort to rebuild the company,” Ratan said he was optimistic about “having the opportunity of regaining the image and reputation it enjoyed in earlier years.”

Air India carried 18.36 million domestic passengers in 2019 operating half of India's international flights.

It has a fleet of about 120 aircraft and 4,400 domestic and 1,800 international landing and parking slots, as well as a further 900 slots at airports in other countries.

Air India bankrupted because it was overstaffed, under strong political interference and after having absorbed Indian Airlines in 2007, which was running a daily deficit of US$ 3 million. Tata Air was nationalized in 1950 but was unable to compete domestically with other airlines and internationally with Gulf airline.

Tata Group is India's largest conglomerate, worth over US$250 billion by market capitalization and employing 800,000 people in 100 countries across the globe. Annual turnover for the entire empire exceeded US$ 100 billion in the latest tax year, according to Tata.

Some of its biggest branches include Tata Consultancy Services, Tata Steel and Tata Motors, though it also sells software, operates hotels and even makes coffee and other consumer products. Tata consultancy Services have a strong presence in Uruguay.