NEW DELHI, India: On Friday, the Indian government announced mega-conglomerate Tata Group will buy back Air India for $2.4 billion, 89 years after founding the airline as Tata Air and fifty years after its nationalization.
The purchase marks the end of a long-term effort to privatize the heavily-indebted flag carrier, which has been funded with $14.7 billion of public money since 2009.
"Welcome back, Air India," tweeted Tata's patriarch chairman emeritus, Ratan Tata, on Friday.
"Having once had the reputation of being one of the most prestigious airlines in the world, Tata will have the opportunity of regaining the image and reputation it enjoyed in earlier years," Ratan Tata said.
Air India began to struggle in the 1990s due to competition from Gulf carriers and no-frills airlines, amassing considerable losses and debt.
Successive Indian governments unsuccessfully attempted to privatize the airline. Last year, Prime Minister Narendra Modi's government agreed to take bids for the entire company, while retaining some of the airline's debt.
Under the deal announced on Friday, Tata will take on some 25 percent of Air India's debt worth 615 billion rupees, while the remainder will be transferred to a special-purpose vehicle.
The Tata Group, which was founded in 1868 by Jamsetji Tata, the "Father of Indian industry," is one of India's largest and oldest companies and employs over 800,000 people in 100 countries. It also owns 51 percent of Vistara and 84 percent of AirAsia India.
Air India has a fleet of some 120 aircraft, as well as 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots at airports abroad.
Mark D Martin, from aviation consultancy Martin Consulting, said Tata should be able to assume the additional debt from the agreement.
In addition to Air India, the Indian government also plans to privatize Bharat Petroleum and a major insurer, in a bid to raise billions of dollars.