A Study Of Mergers And Acquisition In The Indian Airline Industry: A Case Study Of Acquisition Of Air India By Tata Sons

Harsha Vispute, BA LLB, D.E.S. Shri Navalmal Firodia Law College, Pune

ABSTRACT

The Indian aviation market is growing rapidly, and M&As are a preferred method for entry into domestic markets. Domestic airlines also enter into M&As to increase their market share. Mergers and acquisitions aim to achieve greater financial strength for both companies involved. This leads to companies becoming financially stronger, more productive, and more efficient together. Businesses in the aviation sector consolidate to reap benefits such as increased access to capital, better bargaining power in the market, lower costs resulting from high-volume production, and more.

The civil aviation industry in India has emerged as one of the fastest-growing industries in the country during the last few years. It is also one of the most challenging sectors because it is very difficult to maintain a strong holding on a significant portion of the total market share, many big airline companies failed to do so. The Indian aviation industry has recovered fully from the covid-19 pandemic shock as indicated by the air traffic movement which stood at 327.28 million in FY23 compared to 188.89 million in FY22.

The objective of this case study is to analyze the process of acquisition of Air India by Tata Sons and the strategic decision to acquire Air India, delving into the underlying motivations, the potential economic implications, and the broader impact on the Indian aviation industry.

Keywords: Mergers and Acquisitions, Profitability, Leverage, Liquidity, Capital Markets

Air India was acquired by the Tatas in January 2022. It had last acquired

aircraft in 2006. The airlines negotiated the deal for over one year and finally

settled on an order that would cater to all segments.