New Delhi: Officials of the Singapore Airlines (SIA) and Tata Group on Tuesday announced the merger of Vistara with Air India, upon the receipt of requisite government regulatory approvals by March 2024. As part of the merger, SIA will also invest Rs 2,058.5 crore in Air India.
Vistara, a joint venture between Tata Sons and Singapore Airlines (SIA), was established in 2013. Currently, the Tata group has a 51 per cent stake in Vistara, with SIA holding the rest. After the merger, SIA will hold 25.1 per cent of Air India.
SIA and Tata have also agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India in FY 2022-23 and 2023-24. SIA said it intends to fund this investment with its internal cash resources.
“Based on SIA’s 25.1 per cent stake post-completion, its share of any additional capital injection could be up to Rs 50,200 million ($615 million), payable only after the completion of the merger. The actual amount will depend on factors including the progress of the enlarged Air India’s business plan, and its access to other funding options,” an SIA statement read.
It further said that through this transaction, the SIA will reinforce its partnership with Tata and immediately acquire a strategic stake in an entity that is four to five times larger in scale than Vistara.
Air India, earlier the national carrier under the Government of India for 69 years, is now fully owned by Tata Sons after it acquired a 100 per cent stake on January 27, 2022.
“With this consolidation, Air India shall be India’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,” the Tata Group said in a statement.
“The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline… We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost service across domestic and international routes,” said N. Chandrasekaran, chairman of Tata Sons.
Goh Choon Phong, CEO of Singapore Airlines, said: “With this merger, we have an opportunity to deepen our 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 programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage.”