Business Standard

Tata group may need to invest $1 billion to upgrade AI fleet

- ARINDAM MAJUMDER & ANEESH PHADNIS

The Tata group may have to deploy upwards of $1 billion to improve the airline’s passenger reservatio­n system, upgrade, and refurbish Air India’s fleet, primarily the wide-body aircraft which are the mainstay for the airline’s internatio­nal operations, people in the know said.

While the group has not yet decided on how it intends to integrate Air India with its existing airlines Airasia India and Vistara, sources said the first task will be to refinance Air India’s existing loans, upgrade its aircraft gradually, and rewrite multiple business contracts with vendors and suppliers.

“They will have to do 100 things to stabilise the airline and will have to put in a lot of money,” DIPAM Secretary Tuhin Kanta Pandey said, confirming that many aircraft are grounded.

Sources said that consultanc­y firm PWC and legal firm AZB Partners have been appointed for the takeover process.

“They will have to do 100 things to stabilise the airline and will have to put in a lot of money,” DIPAM Secretary Tuhin Kanta Pandey said, confirming that many aircraft are grounded.

Sources said that consultanc­y firm PWC and legal firm AZB Partners have been appointed for the takeover process. “Any decision on the integratio­n of operations is not going to happen immediatel­y. First, the group will take complete ownership of Airasia, probably by March, and then integrate the airline with Air India Express to develop a formidable low-cost operation. Any decision to merge with Vistara will take time as it will require permission from Singapore Airlines,” said a person aware of the developmen­t.

The government is expected to issue a letter of intent (LOI) to Tata Sons next week, following which the share purchase agreement will be formalised.

“We have been declared the winner of the bid. We look forward to working with the government to complete the process over the next few months. We will be able to comment further only later,” said a spokespers­on of Tata Sons.

The person cited above said that the immediate focus would be rewriting the agreements with lessors. While the government has decided to pay ~11,939 crore of lease dues, the title deeds of aircraft are needed to be transferre­d to Tata Sons.

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