Air India's Share Purchase Agreement Signed, Tata Sons Confirmed The Deal For Rs 18000 Crore

The Union Government on Monday signed a share purchase agreement with Tata Sons for the sale of national carrier AIR India for Rs 18,000 crore. With this, now the ownership of Tata Sons on Air India has been fixed. Earlier this month, the government had accepted a proposal by Tales Pvt Ltd, a unit of Tata Group's holding company Tata Sons, to pay Rs 2,700 crore in cash and take responsibility for over Rs 15,300 crore of the airline's total debt. Under this proposal, the government was to sell its 100 percent stake in the airline. After the signing of the share purchase agreement, Tata Sons will have the right to 100 percent shares of Air India.

What is a share purchase agreement?

A share purchase agreement is a legal contract (agreement) between the seller and the buyer. In this agreement, complete details of buy and sell are given along with the price. This Agreement reflects the sale and confirms the mutually agreed upon terms thereof. Earlier this month, the government had accepted a proposal by the salt-to-software conglomerate's holding company Tales Pvt Ltd to make a cash payment of Rs 2,700 crore and take over Rs 15,300 crore of the airline's debt.

What is included in the deal?

The deal also includes the sale of Air India Express and ground handling arm AISATS. This is the first privatization after 2003-04. Air India maintains 4,480 landing and parking slots at domestic airports and 2,738 internationally. Also, the company has about 900 slots for parking at foreign airports. At the same time, Air India's subsidiary Air India Express operates 665 flights every week.

It took a total of 68 years for Air India to come back to Tata Sons. Air India was established in 1932 as Tata Air Services, which was later renamed as Tata Airlines. In 1953, the Government of India bought ownership of Air India from Tata Sons. The airline's name was officially changed to Air India on 8 June 1962. And on 11 June 1962, Air India became the world's first all jet airline.