Group plans drastic change in AI, to build on TCS for tech push
The Tata group’s holding company is also said to be looking to install new leadership in Air India, refinance costly debt, renegotiate high-cost supplier contracts and refurbish older planes, among others. It will further leverage the capabilities and knowledge of other operating companies such as TCS and Taj Sats to revise Air India’s existing operating model and cost structure. “Did you know that TCS manages the IT systems and applications of most national operators in other countries except India? Asked a Tata group executive. “Once the deal is done, TCS would step in to manage Air India’s IT and digital operations from A to Z. This would improve Air India’s efficiency and reduce operating and maintenance costs. TCS is the technology partner of Vistara, a joint venture between Tata Sons and Singapore Airlines. It also manages the IT and digital systems of Singapore Airlines, the world’s second largest carrier.
Tata Sons would hire a new CEO for Air India as part of the carrier’s makeover plans, another person said. In addition, Saurabh Agrawal and his finance team at Tata Sons are expected to resolve Air India’s business problems by refinancing expensive debt, reducing lease debts and reinstating contracts with suppliers. “There is a good chance that a foreign national will be chosen to lead Air India. Chandra (referring to the chairman of Tata Sons) knows many airline CEOs and their senior executives one-on-one, ”the second person said. Before Chandrasekaran became president of Tata Sons, he was CEO of TCS, which has a list of envious customers for airlines.
It is unclear who would head the board of Air India, but the first person quoted earlier said that if the current model is followed where the chairman of Tata Sons is the chairman of the major operating companies, then Chandrasekaran would head the carrier’s board of directors with Ratan Tata as chairman emeritus. .
While Tata Sons would take over Air India’s Rs 15,300 crore debt and certain “identified” current and non-current liabilities in mergers and acquisitions (M&A), the devil is in the details, said an investment banker . When Tata Sons bought VSNL in 2002 from the government, the latter, which had retained part of the capital of the telecommunications company until recently, supported it but in the acquisition of Air India, there is no no guarantees from the Center (such as stopping PSU and Parliament officials to use Air India only for official travel purposes after change of ownership). This would impact Air India’s business as it would have to compete for this pie.
Tata Sons could also leverage its links with aerospace majors Boeing and Airbus for better deals to replace Air India’s older generation planes with more fuel-efficient planes to better compete with its competitors ( Tata Advanced Systems undertakes the manufacture and assembly of aircraft / aircraft components for the United States and French giants). It could also use Air India’s groundhandling business unit to serve not only its two existing carriers, Vistara and AirAsia India, but also other airlines, which would increase its revenue. In addition, the company’s airline catering business, Taj Sats, could be used to serve meals to Air India passengers at 30,000 feet. Several operating companies have helped Tata Sons conduct Air India due diligence, as Tata Steel has reviewed employment contracts, and their capacities will be further utilized after the acquisition is finalized, another group executive said. .
An industry expert said Tata Sons would also need to change the schedules of its four airlines to provide power for domestic flights to fill the large corps going nonstop to international destinations. This scissor operation – people descending from narrow-body planes and then transferred to long-haul aircraft on wide rockets – to fly people to and from India is currently mostly carried out by Gulf carriers.