Recently there was one particular joyful news
about the nationalised airline Air India being sold to the highest bidder which was Tata for Rs 18,000 crore!
This has come as a huge shock as after 68 years Tata has once again gained control over Air India.
You might be confused about the relevance of 68 years. Let me tell you.
Air India was founded by JRD Tata himself!
He loved flying planes and was an aviation enthusiast.
The 'Maharaja' mascot was also created under his leadership.
Let me tell you something interesting. Do you know the connection between Ratan Rata and JRD Tata?
Was JRD Tata Ratan Tata's biological son? No.
Ratan Tata's biological parents were Naval & Sooni Tata.
When the couple divorced Tata was sent to an orphanage.
Though JRD & Naval tata shared the same surname, they were distant relatives.
JRD adopted Ratan and raised him to be the prominent business man he is today.
This is one of the reasons why Ratan Tata paid such a huge sum to gain control over the airlines his father started.
How interesting and surprising is that!
Now let me tell you the entire story.
In 1953, the first PM of India Jawaharlal Nehru and his government
paid J R D Tata Rs 2.8 crore and took 100% ownership of Air India.
In the beginning, Air India was very successful and became India's prefered airlines.
However the emmergence of private airlines led to stiff competition.
Strong competition from private airlines and bad management led to Air India’s decline and thousands of crores in losses and loans.
In 2001, when the BJP were in power,
they tried to sell 40% stake to private companies as Air India was in major losses.
No one was intrested.
The losses continued to mount and there were major economic troubles.
Infact during 2009-10 to deal with the financial troubles, the government used the tax payers money
and gave Rs 1.1 lakh crore to the airlines to make up the losses or raise loans to do so.
How shocking! There was no profit in return all due to poor management.
In 2018, the Narendra Modi government was ready to sell 76% stake
but again not a single company was interested.
The reason? Private companies felt that even with the government's miniscule 24% stake
they would not be able to tackle the airlines immense debt accumalated over the years.
They were apprehensive about the government wanting to micromanage the operations.
Instead companies wanted sole ownership over the airlines and gain complete control over.
On 7 August 2020, an Air India flight ran off the runway and crashed.
Private companies felt taking over now would mean shouldering the blame for the incident.
This is why no one was ready and the airlines was suffering.
The government could not give Air India anymore money to stay afloat.
This is because the government had to pay Rs 7,300 crore per year for the company's expenses.
Its meant Rs 20 crore per day. It had become simply impossible.
As of August 2021, the company had a total debt was Rs 61,562 crore.
The government finally gave in and decided to sell its entire stake.
Tata won the bid for Rs 18,000 crore.
They did not agree to cover the entite debt said they would only pay Rs 18,000 crore.
Rs 15,300 crore will be paid through various assets like shares, land, etc
and the remaining Rs 2,700 crore would be paid in cash.
That leaves Rs 43,562 crore of debt.
The Air India assets left with the government, such as buildings, flights, etc.,
will likely generate Rs 14,718 crore.
The remainder Rs 28,844 crore will come out of the government’s pocket.
Ratan Tata is jubiliant over Air India coming back to the Tatas as its his dream come true.
He reminiscenced about his father and Air India founder JRD Tata.
JRD was responsible for Air India's success before its downfall.
He is determined to take it back to its former glory although this task will sure need a lot of money.
Ratan Tata has a goal to make it successful like before. How cool is that!