Tata Group has made a significant announcement on Vistara and Air India merger, in which Singapore Airlines will retain 25.1 per cent stake in Air India. The deal is expected to be finalized by March 2024, subject to statutory approvals. Currently, the Tata group holds 51 per cent stake in Vistara, while the remaining 49 per cent is held by Singapore Airlines. In a release, SIA said that Vistara and Air India will be merged, and it will also invest Rs 2,058.5 crore in Air India as part of the transaction. Also, Singapore Airlines has confirmed that it will finance the investment through its internal cash resources.
In a separate release, the Tata group said that with the consolidation, Air India will be the country’s leading domestic and international carrier with a combined fleet of 218 aircraft, “making it India’s largest international carrier and second largest domestic carrier”. .
SIA and Tata Sons have also agreed to participate in additional capital injection, if required, to fund the growth and operations of the enhanced Air India in FY 2022-23 and FY 2023-24.
SIA said, “Following completion of SIA’s 25.1 per cent stake, its share of any additional capital injection up to ₹50,200 million (S$880 million, US$615 million) will be payable only after completion of the merger.” shall be payable,” SIA said in the release.
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The actual amount will depend on factors, including the progress of the expanded Air India business plan and its access to other funding options. SIA intends to fully finance any additional capital injection with its internal cash resources.
Tata Sons Chairman N Chandrasekaran said the merger of Vistara and Air India is an important milestone in the journey of making Air India a truly world-class airline.
“As part of the transformation, Air India is focused on enhancing both its network and fleet, improving its customer proposition, enhancing safety, reliability and on-time performance. We look forward to the opportunity to build a stronger Air India which will offer both full service and low cost service on domestic and international routes,” he said.
The four airlines are part of the Tata group. They are Air India, Air India Express, AirAsia India and Vistara. The Tata group had acquired Air India and Air India Express in January this year.
Vistara started flying in January 2015. AirAsia India was launched in 2014, while Air India Express started operations in 2005.
In October, Vistara was the second largest carrier with a domestic market share of 9.2 per cent, behind Indigo, which had a market share of 56.7 per cent.
During the same period, Air India and AirAsia India had a domestic market share of 9.2 percent and 7.6 percent, respectively.
In terms of on-time performance (OTP), Air India topped the list with 90.8 per cent, followed by Vistara and AirAsia India both at 89.1 per cent.
On 13 October, SIA said it was in “confidential discussions” with the Tata group to explore a possible merger of Vistara and Air India.
“Discussions seek to deepen the existing partnership between SIA and Tata, and may include a possible integration of Vistara and Air India,” it said in a filing to the Singapore Stock Exchange.
SIA Chief Executive Officer Goh Choon Fong said that with this merger, SIA has the opportunity to deepen its relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.
“We will work together to support Air India’s transformation, unlock its significant potential and restore it to its position as a leading airline globally,” he added.
With inputs from PTI