A little over two weeks after the government of India chose conglomerate Tata Group to acquire Air India (AI, Delhi International), Tata has entered into a share purchase agreement with the government to buy the 100% stake.

As India’s Ministry of Civil Aviation announced on social media: “In a historic move, the Share Purchase Agreement was signed on 25th Oct by MoCA with Tata Group for strategic disinvestment of @airindiain. @SecyDIPAM, SecyMoCA along with senior officials from DIPAM, MoCA and associated stakeholders were present during the event.”

The conglomerate will now need to fulfil the financial and other conditions outlined in the agreement before taking over the flag carrier, together with 100% of low-cost subsidiary Air India Express (IX, Delhi International) and a 50% stake in airport services and groundhandling firm Air India SATS. The transaction is expected to conclude by December.

Talace Pvt. Ltd., a wholly-owned Tata subsidiary, had provided the winning offer quoting an enterprise value of INR180 billion rupees (USD2.4 billion). Of this sum, the group will pay the government INR27 billion (USD359.5 million) in cash while retaining INR153 billion (USD2.04 billion) to cover part of the airline’s debt pile.

The decision to enter into the sale purchase agreement was taken by the Air India Specific Alternative Mechanism, a committee formed in January 2020 to oversee the privatisation headed by Amit Shah, minister of home affairs. Under the agreement, jobs for all of Air India’s employees will be safeguarded for one year. The three entities have about 8,000 permanent employees, while almost 19,000 are employed on a contractual basis.

Acquiring Air India allows Tata Group to leapfrog most of its competitors in the domestic market. According to the ch-aviation capacities module, the flag carrier has a domestic market share in terms of capacity by weekly seats of 9.12% (Air India Express has an additional 0.23%) as of the first week of November 2021, while the group’s existing ventures AirAsia India and Vistara have 7.00% and 7.42%, respectively. This combination puts it above Go First with 7.99% and SpiceJet with 10.11%. IndiGo Airlines, however, is way out in front with a market share of 56.61%.