Air India had to be sold because debt had been piling up to a point where it could no longer be sustained by the government, Civil Aviation Minister Jyotiraditya Scindia told NDTV today, a day after Tata group formally took over the airline.
"It was just not possible," Mr Scindia said.
The sale of Air India to Tata group was an "extremely difficult and challenging transaction", he said. "This has been a landmark transaction under which all the debt has been taken care of and is a truly win-win transaction where everyone is a winner. It was an extremely difficult and challenging transaction from an accountancy point of view," Mr Scindia said.
"A number of legal processes also cropped up and all those had to be met under a certain deadline, so that was a big challenge, but we managed to do it all," he said. "I thank all the officials on both sides who worked so hard in the process and ensuring that this transaction is closed successfully. The credit goes to them," Mr Scindia added.
On August 31, 2021, Air India had a total debt of Rs 61,562 crore. Of this, Rs 46,262 crore is being transferred to a special purpose vehicle, or SPV. The balance debt has been cleared by Tata.
Tata's winning bid for Air India was Rs 18,000 crore, higher by Rs 2,900 crore from the bid made by a consortium led by SpiceJet chief Ajay Singh. Tata has paid Rs 2,700 crore in cash and taken over debt of Rs 15,300 crore.
"There had been a staggering loss and the burden was on taxpayers. That was just not right. Then this deal came through. This is a win-win transaction and Air India is now back with its erstwhile owners and I am certain that under their stewardship Air India has a bright future ahead," Mr Scindia told NDTV.
He said all Air India employees, whose jobs are protected for one year, are equal stakeholders in carving out a future for the airline.
Air India is the third airline brand in the Tatas' stable - it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.