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Airasia Sells Remaining Stake To Air India

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The Malaysian group received Rs 155 crore from this deal resulting in moving full ownership to the Tata Group. The group CEO of the AirAsia Aviation Group, Bo Lingam said that the decision taken was best suited for AirAsia in order to develop an Asean-only business

The Malaysian multinational airline AisAisa Bhd sold 16.33 per cent, being the remaining stake, in AirAsia India to Air India which is now owned by Tata. This move is followed by the recent acquisition by Tata from AirAsia Berhad of a 32.7 per cent stake for Rs 276.29 crore in December 2020.

The Malaysian group received Rs 155 crore from this deal resulting in moving full ownership to the Tata Group. After the Tata group acquired Air India last year, now it aims to consolidate its aviation businesses. Expectedly, it may merge AirAsia India and Air India Express as part of consolidation.

The group CEO of the AirAsia Aviation Group, Bo Lingam said that the decision taken was best suited for AirAsia in order to develop an Asean-only business.

Various other Malaysian airlines will continue to serve, as India will always remain an important market for AirAsia. The experience gained from the domestic market operations for AseanIndian market’s growth in logistics and passenger services to a far greater extent, will be utilised, he added.

Back in 2014, AirAsia India’s began its journey, when the Tata Group shook hands with Tony Fernandes who was then the owner of the AirAsia Group, in order to enter the low-cost aviation space.

However, the deal could not attract much traction in the competitive Indian market. Apart from this first information report (FIR) was also filed by the Central Bureau of investigation (CBI) filed a in 2018 against Fernandes alleging him having paid bribes to boost permission for international operations.

A working group was formed for evaluation and execution of the integration of Air India Express with AirAsia India, said Air India. Sunil Bhaskaran, CEO and MD of AirAsia India, and Aloke Singh, CEO of Air India Express, lead the group.

Such group will report to a steering committee chaired by Campbell Wilson, CEO and MD of Air India, who will become the chairman of Air India Express and AirAsia India. The Air India group will mark its presence both in full-service and low-cost segments, reported a media house.

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Tata In Talks With Banks For Rs 15,000 Cr Loan For Air India’s Revival

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The funds be will allocated to cater daily air operations and losses and restore the fleet, pay aircraft rentals and overhauling IT systems, as per the report. The tenure of loan will three-year with an annual reset ranging between 7.5 and 8 per cent

The Tata group is in talks with banks to acquire working capital loans around Rs 15,000 crore for Air India. It purchased the airline from the government last year and is now making a valiant move to revive it, reported a media house.

The funds be will allocated to cater daily air operations and losses and restore the fleet, pay aircraft rentals and overhauling IT systems, as per the report.

The tenure of loan will three-year with an annual reset ranging between 7.5 and 8 per cent, informed an official.

In 2021, State Bank of India (SBI), HDFC Bank, and Bank of Baroda had provided a Rs 23,000 crore, unrated, unsecured loan to Talace which is a Tata Sons company. It then had won the bid for Air India, at a rate of 4.25 per cent. The same loan stands due for renewal, at January end.

As per a bank official, surge in interest rates and low cash in the system will hike borrowing costs. The Reserve Bank of India website has listed 6.91 per cent as the cut-off for 364-day Treasury Bills.

The acquisition of Air India was made by Tata Sons through Talace in October during last year for Rs 18,000 crore. For around 69 years after the government nationalised the airline in August 1953, the ownership of carrier came back with Tatas in January 2022.

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Air India In Talks With Aircraft Manufacturers To Buy Planes: CFO, Air India

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After Tatas acquired Air India in January this year, to reviving the loss-making airline, they unveiled a comprehensive transformation plan. Majorly the plan focuses on five factors being industry leadership, robust operations, commercial efficiency, industry best-talent and exceptional customer experience

Air India Chief Financial Officer Vinod Hejmadi said that Air India is in discussions with aircraft manufacturers for acquiring planes on 14 October. Tata group-owned airline is planning expansion of its fleet by three times as compared to the current size.

He also said that currently the airline is going through the “taxiing phase” and it requires years two years to take off, consolidate and enter the growth mode. 

After Tatas acquired Air India in January this year, to reviving the loss-making airline, they unveiled a comprehensive transformation plan. Majorly the plan focuses on five factors being industry leadership, robust operations, commercial efficiency, industry best-talent and exceptional customer experience. 

Previously he At the Aviation Insurance Symposium 2022 hosted by Global Insurance Brokers Pvt Ltd he said that it was a matter of survival for the airline however, now it looks towards a growth trajectory after Tata group the acquired the airline. 

Further he said, the airline is investing heavily in technology, digitisation and manpower and it will be inducting five wide-body Boeing and 25 Airbus narrow-body planes in coming 15 months. The aircraft being leased are 21 Airbus A320 neos, four Airbus A321 neos and five Boeing B777-200LRs, as per a 15 September release issued by the airline. 

Air India’s narrow-body fleet stands at 70 aircraft and out of them, 54 are in service whereas the remaining 16 aircraft will progressively return to service by early 2023. The wide-body fleet stands at 43 aircraft, of which 33 are operational. The rest will return to service by early 2023, as per the release. 

Tata group has initiated an exercise to evaluate options to consolidate AirAsia India and Vistara under Air India to bring operational synergies. At present, Tata group holds 51 per cent stake in Vistara and is now owns Air India and Air India Express. The group also has 83.67 per cent shareholding in domestic carrier AirAsia India. 

Singapore Airlines on 13 October said that it was in “confidential discussions” with Tata group to explore possible merger of Vistara and Air India. At the same time, Hejmadi on 14 October said Air India welcomes competition as this will ensure that everyone is on their toes.

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SIA Confirms On Vistara-Air India Merger Talks With Tata Group

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According to media reports, the situation is still blurry of what stake, if any, SIA would hold if merger of Vistara and Air India happens or if fresh funds would be required to the ail Air India group. The said deal may require the green light from Singapore’s competition watchdog and the authorities in India, according to a media statement

Singapore Airlines confirmed about being in talks with India’s Tata Group over a potential merger of Vistara airline and Air India. There exists a joint venture between the two companies viz Singapore airline and Vistara airline. And Tata Group recently completed 100 per cent acquisition of Air India. 

The confirmation popped in amid media reports that Tata planning to merge it 100 per acquisition with Vistara. Tata holds 51 per cent stake in Vistara, whereas SIA holds 49 per cent.   

According to media reports, the situation is still blurry of what stake, if any, SIA would hold if merger of Vistara and Air India happens or if fresh funds would be required to the ail Air India group. 

The said deal may require the green light from Singapore’s competition watchdog and the authorities in India, according to a media statement.

Back in 2013, when Vistara was established, it gave the SIA group a stake in India’s fast-growing aviation sector. India having prominent domestic and international traffic flows, may witness to more than double over in coming 10 years. 

It can be noted that, along with international and domestic traffic, India will soon become the third-largest aviation market across globe nearly by 2024, as according to the International Air Transport Association

Indian Civil Aviation Minister Jyotiraditya Scindia had said in November 2021 about India becoming the third-largest domestic aviation market in the world. 

Media reports say, the SIA considers the Vistara stake as an integral part of its multi-hub strategy. This will give it access to crucial sources that complement its strong Singapore hub. 

SIA backs Vistara with operational and management expertise at the same time Tata provides the corporate umbrella and domain knowledge in India.  Chief executive of Vistara is a Singaporean, Vinod Kannan. Vinod has been approved from SIA followed by his colleague Leslie Thng, who returned to Singapore and is now CEO of Scoot.

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Air India To Expand Fleet With 30 Boeing And Airbus Jets

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Air India’s new owner, the autos-to-steel conglomerate Tata Group, faces an uphill task to upgrade the carrier’s ageing fleet and turn around its financials and service levels

Tata Group-owned Air India said on Monday that it will lease 30 Boeing and Airbus aircraft, expanding its fleet by more than 25 per cent.

Air India’s new owner, the autos-to-steel conglomerate Tata Group, faces an uphill task to upgrade the carrier’s ageing fleet and turn around its financials and service levels.

“After a long time without significant growth, Air India is delighted to resume expanding its fleet and global footprint,” said Air India Chief Executive Campbell Wilson.

“These new aircraft, together with existing aircraft being returned to service, address an immediate need for more capacity and connectivity and mark a strong step forward.”

The latest deals comprise the leasing of 21 Airbus A320neos, four Airbus A321neos and five Boeing B777-200LRs.

The Airbus jets will begin joining the fleet in the first quarter of next year and are expected to be deployed on domestic and short-haul international routes.

The B777-200LRs will join the fleet between December and March, with deployment likely to be on routes from Indian cities to the United States.

The airline currently has 54 narrow-body aircraft and 33 wide-body aircraft operational, it said in a statement, adding that more are expected to be in service soon.

(Reuters)

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4,500 Air India Employees Seeking Voluntary Retirement

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 In order to cut costs, it is overhauling the airline, enhancing productivity, and revitalising archaic systems with digital technology, according to a newspaper report.

A voluntary retirement scheme offered by the new carrier’s management has been opted by approximately 4,500 Air India employees on 21 July, 2021, as per the media organisation report. Tata group had strategised this scheme in order to hire new talents across operations in order to rejuvenate. In order to cut costs, it is overhauling the airline, enhancing productivity, and revitalising archaic systems with digital technology, according to a newspaper report.

In total, Air India employs 12,085 people, of which 8,084 are permanent employees, and 4,001 are on  contractual basis. The low-cost airline of the company has 1,434 employees worldwide. In the next five years, about 5,000 Air India employees are expected to retire. Sources said that the transformation will take time, and they all must be prepared for the long haul. The company is also investing in topnotch aircraft, so they also need to hire top-notch engineers with international experience to operate the new equipment.

VRS was announced by Air India in June aimed at permanent employees who have completed 55 years of service with the company or have worked continuously for the company for 20 years.  The eligibility age for some cabin crew members, clerical and unskilled staff has been reduced from 55 to 40 years of age as part of the new VRS. After Tata Sons purchased Air India for Rs 2,700 crore on 27 January, the government required its employees to stay on for a year following the share purchase agreement.

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Air India Paid ‘Avoidable’ Rs 43.85 Cr Penalty: CAG

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The Comptroller and Auditor General (CAG) has mentioned the penalty in a report tabled in Parliament on Tuesday wherein it said that “avoidable payment of penalty due to delay in return of removed components” was made by Air India

Air India shelled out an “avoidable” penalty of Rs 43.85 crore to Boeing for non-adherence with the contractually stipulated timelines under the agreement for an aircraft component service programme, according to CAG. The penalty amount was paid in August last year for the July 2016 to December 2019 period.

The Comptroller and Auditor General (CAG) has mentioned about the penalty in a report tabled in Parliament on Tuesday wherein it said that “avoidable payment of penalty due to delay in return of removed components” was made by Air India. In December 2015, the airline had entered into an agreement with Boeing for Rotable Exchange Programme related to servicing of 787 aircraft component and the pact came into effect from July 2016.

As per the agreement, Air India was required to return the removed component along with the component information to Boeing within 10 calendar days after Boeing delivered the serviceable exchange component and in case of failure to do so, then delayed return fee is payable to the aircraft maker. The national carrier defaulted on the concessional late return fees/ penalty for the period from July 2016 to December 2019, following which Boeing served a letter, in July 2020, intimating suspension of the programme if payment was not received by July 31, 2020. Subsequently, Boeing served six months’ notice of termination and withdrew the discounts offered earlier.

During July 2016 to December 2019 period, CAG said there were several instances of delayed return of removed component by Air India over and above the stipulated time limit of 10 days. Citing audit analysis, CAG said that during the initial period (July 2016 to December 2017), there were 170 instances of delayed return and in 88 instances, the delay was more than 30 days with a maximum of 214 days.

“… due to non-adherence to the timeline for return of removed parts as stipulated in the Agreement, Air India Limited paid penalty of USD 5.87 million (Rs 43.85 crore) to M/s Boeing,” the report said. The apex auditor’s findings are part of the report ‘Union Government (Commercial) (Compliance Audit Observations) for the year ended 31 March, 2020’.

(PTI)

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CCI Approves Acquisition Of Shareholding In Air India By Tata Group

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The Rs 18,000 crore-deal that includes the winning bidder Talace taking over Rs 15,300 crore-worth debt, is a major step in the government’s efforts over the years to revive the ailing airline.

Competition Commission has approved Tata Group’s proposed acquisition of debt-laden Air India as well as its two subsidiaries.

The Rs 18,000 crore-deal that includes the winning bidder Talace taking over Rs 15,300 crore-worth debt, is a major step in the government’s efforts over the years to revive the ailing airline.

Talace Pvt Ltd, a wholly-owned subsidiary of Tata Sons, emerged as the winning bidder in October. It will buy 100 percent stakes in Air India Ltd, Air India Express Ltd and 50 percent shareholding in Air India SATS Airport Services Pvt Ltd (AISATS).

Competition Commission of India (CCI) has approved Talace acquiring a shareholding in Air India, Air India Express and AISATS, an official release said on Monday.

Deals beyond a certain threshold require approval from the CCI, which has the mandate to ensure fair competition in the marketplace.

AISATS is engaged in the business of providing ground handling services at Delhi, Bengaluru, Hyderabad, Mangalore, and Thiruvananthapuram airports. It also provides cargo handling services at Bengaluru airport, the release said.

State-owned Air India has been incurring a monthly loss of more than Rs 600 crore.

Civil Aviation Minister Jyotiraditya Scindia, on December 14, said the Air India transaction is a “win-win situation” across the board and that taxpayers’ money will now be more justifiably used for many more socially productive purposes rather than filling the deep losses of the airline.

“Shareholders agreement was signed in November. Today, we are in the process of closing all the conditions precedent and I am very confident at the turn of the New Year, you will have the transfer of Air India to its new owner…,” he had said.

On October 20, Prime Minister Narendra Modi said the decision on Air India will give new energy to the country’s aviation sector.

As of August 31, Air India had a total debt of Rs 61,562 crore. Of the total amount, Talace will take over Rs 15,300 crore, and the remaining Rs 46,262 crore will be transferred to AIAHL.

In 2019, the government set up a special purpose vehicle — Air India Assets Holding Ltd (AIAHL) — for holding debt and non-core assets of the Air India group.

(PTI)

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Decision on Air India will give new energy to aviation sector: PM Modi

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Tata group has emerged as the winning bidder for Air India, and on October 11, a letter of intent (LoI) was issued to the group. Tata group has emerged as the winning bidder for Air India, and on October 11, a letter of intent (LoI) was issued to the group.

With Air India set to be acquired by the Tata group, Prime Minister Narendra Modi today said the decision on the national carrier will give new energy to the country’s aviation sector. His comments come weeks after Tata group emerged as the winning bidder for Air India paving the way for disinvestment of the loss-making carrier.

In an address after inaugurating the Kushinagar International airport, PM Modi said the decision on Air India will give new energy to the aviation sector of India. Tata group has emerged as the winning bidder for Air India, and on October 11, a letter of intent (LoI) was issued to the group. Tata group has emerged as the winning bidder for Air India, and on October 11, a letter of intent (LoI) was issued to the group.

Earlier this month, the government accepted an offer by Talace Pvt Ltd, a unit of Tata group, to pay Rs 2,700 crore cash and takeover Rs 15,300 crore of Air India’s debt. After Tatas accept the LoI, the share purchase agreement (SPA) for the sale will be signed. Along with Air India, Tatas will acquire low-cost carrier Air India Express and Air India’s 50 percent stake in equal joint venture AISATS.

PTI

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IndiGo Sees Tata As ‘Formidable Competition’ After Air India Deal

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Tata also owns a majority stake in Vistara, a premium joint venture with Singapore Airlines Ltd (SIAL.SI), as well as budget airline AirAsia India.

India’s largest airline IndiGo expects Tata Sons to be “formidable competition” once the conglomerate finalizes its $2.4 billion purchase of Air India from the government, the budget airline’s chief executive said.

Tata also owns a majority stake in Vistara, a premium joint venture with Singapore Airlines Ltd (SIAL.SI), as well as budget airline AirAsia India.

“I see them as formidable competition but I welcome them. It is a sensible thing,” IndiGo CEO Ronojoy Dutta told a CAPA Centre for Aviation event on Wednesday, in a pre-recorded interview.

The government announced on Friday that Tata would resume control of Air India, marking the end of years of struggle to privatise the financially troubled airline.

“I think they will become more economically responsible,” Dutta said of Air India. “Having a large player funded by taxpayers is not fair competition for us.”

IndiGo controls more than half of the Indian domestic market but its international operations are far smaller than Air India’s.

Dutta said IndiGo was focused on flights within seven hours of India using narrowbody planes, while Air India was more focused on full-service long-haul operations, leaving plenty of room in the market for both.

In the domestic market, low-cost carrier Akasa Air, backed by billionaire Rakesh Jhunjhunwala, expects to take to the skies next year. 

One of Akasa’s co-founders, Aditya Ghosh, spent a decade with IndiGo and was credited with its early success.

Dutta said he viewed Akasa as less of a competitive threat than Tata’s airlines over the next two to three years because it would take time for the new entrant to build up operations.

(Reuters)