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Tata to pay $2.4 billion to regain control of troubled Air India By Reuters

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© Reuters. FILE PHOTO A Air India Airbus A320neo aircraft takes off from Colomiers, France on December 13, 2017. REUTERS/Regis Duvignau/File Photo

By Aftab Ahmed

NEW DELHI, (Reuters) –Tata Sons has won the bid for Air India. This is the result of many years of efforts to privatize the airline.

Prime Minister Narendra Modi will win the sale of his loss-making national flag carrier. This was a huge victory as tax payers have paid an average of $3 million per day in the past decade. The sale of the loss-making national flag carrier would bode well for future stake sales in other state-run businesses to boost public finances and create a truly market-driven India.

Talace Pvt Ltd is a Tata Sons unit that owns Jaguar Land Rover luxury carmaker Jaguar Land Rover. It will purchase 100% of Air India. Tuhin Kanta Pantey, Secretary of the Department of Investment and Public Asset Management said.

Air India will be re-established in the ownership of Tata Airlines which was founded in 1932.

Tata is expected to take $2 billion from Air India’s $8.2billion total debt. The deal amount will result in an equity value only of about $400m, which Tata would pay to the government.

Tata operates currently two airlines, Vistara in India (OTC:), and AirAsia India (a partnership with Malaysia’s AirAsia Group).

Ratan Tata (NYSE:) said that even though it will require “considerable effort rebuilding Air India”, it would be worth it for Tata’s continued presence in aviation.

In a Twitter message, he wrote: “Welcome back Air India!

Tata’s acquisition of the airport will provide it with an additional 4,400 domestic slot and 1,800 international slot at Indian airports each year, in addition to 900 slots at overseas airports. The most lucrative are located at London Heathrow.

Tata will also be able to hire 8,000 employees, and around 120 aircraft. These include older narrowbody Airbus planes as well as some more modern widebody Boeing (NYSE) planes.

Tata Sons released a statement saying that Air India offers a unique, attractive, and international presence. He also stated that nearly two-thirds (33%) of airline revenue come from foreign markets, such as North America, Europe, and the Middle East.

($1 = 74.9740 Indian Rupees

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