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Wednesday, February 1, 2023

Tata Group Plans to Borrow Rs 15,000 Crore for Air India’s Working Capital

The funds will be used to cover day-to-day air operations and overhaul IT operations

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Raju Vernekar
Raju Vernekar
Raju Vermekar is a senior Mumbai-based journalist who have worked with many daily newspapers. Raju contributes on versatile topics.

INDIA. Mumbai: The Tata group is planning to acquire working capital loans of approximately Rs 15,000 crore from banks for Air India, the airline it purchased from the government last year and began operations early this year.

The funds will cover daily air operations and losses, restore the fleet, pay for aircraft rentals, and overhaul IT systems. The loan will have a three-year term with an annual reset of 7.5 and 8 percent, official sources said.

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Last year, State Bank of India (SBI), HDFC Bank, and Bank of Baroda provided a Rs 23,000 crore, unrated, unsecured loan to Talace, a Tata Sons company that won the bid for Air India, at a rate of 4.25 percent. The loan is due for renewal in January next year.

In October last year, the Tata Group (Tata Sons, through Talace) emerged as the winning bidder for Air India with a bid amount of Rs 18,000 crore. The group paid Rs 2,700 crore and took over Rs 15,300 crore of the airline’s debt. Around Rs 46,000 crore was transferred to a special purpose vehicle-AI Asset Holding Ltd (AIAHL). The deal also included the sale of AISATS. About 69 years after the government nationalized the airline in August 1953, it took ownership of the carrier on January 27.

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The Tata group announced the completion of the transaction to purchase Air India from the Government of India. The transaction covered three entities – Air India, Air India Express, and AISATS. Air India is India’s flag carrier and premier full-service airline. Air India Express is a low-cost carrier. AISATS provides a comprehensive suite of ground handling and cargo handling services. 

In January, the government settled Rs 62,057 crore of Air India’s legacy debt and other liabilities that were left in AIAHL. Of this, Rs. 36,254 crores were infused as equity for repayment of past government-guaranteed borrowings of Air India and Rs 12,357 crore for repayment of borrowings for sale and leaseback rentals for aircraft. AIAHL also held Air India’s non-core assets, such as a stake in Hotel Corp of India (HCIL), paintings, artifacts, and immovable properties.

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About Air India

Founded by the legendary JRD Tata, Air India has pioneered India’s aviation sector, and the airline’s history is, in fact, synonymous with the annals of civil aviation in India. 

Since its first flight on October 15, 1932, Air India has spread its wings to become a major international airline with a network across the USA, Canada, UK, Europe, Far-East, South-East Asia, Australia, and the Gulf. 

The airline also has an extensive domestic network, including far-flung areas of India’s North-East, Ladakh, Andaman & Nicobar Islands. Air India has been a member of Star Alliance, the largest global airline consortium, since July 2014. 

India’s first international budget carrier, Air India Express, was launched in 2005 to meet the need for affordable services on short and medium-haul routes- connecting smaller towns directly to the Gulf and southeast Asia regions.

Air India, along with Air India Express, has been playing a pivotal role in standing by the Nation in its hour of crisis. In an epic mission, Air India evacuated stranded people from all over the world from and to India in the aftermath of the Covid-19 outbreak through the Government’s Vande Bharat Mission and Air Transport Bubble Flights.

Also Read: Air India Unions Threaten Strike to Retain Staff Quarters

Author

  • Raju Vernekar

    Raju Vermekar is a senior Mumbai-based journalist who have worked with many daily newspapers. Raju contributes on versatile topics.

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