Vistara to merge with Air India, confirms Singapore Airlines

Singapore Airlines Ltd (SIA) on Tuesday confirmed the Vistara-Air India merger in a press release. SIA will invest nearly $250 million into Air India as part of the transaction, the Singaporean carrier said in a statement, with the pair aiming to complete the merger by March 2024 subject to regulatory approvals.

  • Updated On Nov 29, 2022 at 06:39 PM IST
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Singapore Airlines Ltd (SIA) on Tuesday confirmed the Vistara-Air India merger in a press release.

SIA will invest nearly $250 million into Air India as part of the transaction, the Singaporean carrier said in a statement, with the pair aiming to complete the merger by March 2024 subject to regulatory approvals.

SIA could spend up to $615 million based on its 25.1% post-completion stake, payable after the completion of the merger, it said, adding it would fund the growth plans through its internal cash resources.

Tata group currently owns a 51 per cent stake in Vistara, and the remaining 49 per cent shareholding is with Singapore Airlines (SIA).

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The agreement will create a stronger rival to the country's dominant carrier IndiGo and give the Singaporean airline, which lacks a domestic flying market, a more solid foothold in one of the world's fastest-growing aviation markets.

It will also allow the Indian conglomerate to consolidate its brands around full-service Air India and low-cost Air India Express, which is being merged with AirAsia India after Tata bought out former partner AirAsia.

In a statement, Vistara CEO Vinod Kannan said that Vistara is a fine manifestation of its parent brands Tata Sons and Singapore Airlines, and "we are delighted that we will continue to be guided by their legacies as we merge with Air India".

"The integration process will take some time, and during this phase, it will be business as usual for all our stakeholders, including customers. We will continue to share relevant information with all of them, as appropriate," he added.

A full-service carrier, Vistara was the country's second-largest domestic carrier with a market share of 9.2 per cent in October.

"There is enormous potential for an airline group with the scale and network of the combined entity. We look forward to providing more opportunities for our customers, employees, and partners while putting a spotlight on Indian aviation on the global stage," Kannan said.

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The October 2021 sale of Air India to Tata Sons ended decades of attempts to offload the carrier from the government’s books.

Under the new owner, the Tatas, Air India is all geared up for a renovation as the sprawling company prepares to recast its faltering aviation empire.

The transaction marked the country’s most high-profile privatization under Prime Minister Narendra Modi, ending decades of attempts to offload the money-losing, debt-laden carrier that survived on years of taxpayer bailouts.

The deal will give the new entity a combined Indian market share of 24%, making it a stronger competitor to IndiGo, which has a 56% share, as well as full-service Middle Eastern rivals that carry a large share of international traffic.

It will give Tata a fleet of 218 aircraft split between planemakers Boeing and Airbus, making it India's largest international carrier and second largest domestic airline.

SIA said it and Tata had agreed to participate in additional capital injections in Air India if required to fund growth and operations over the next two financial years.

"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," SIA Chief Executive Goh Choon Phong said.
  • Published On Nov 29, 2022 at 06:39 PM IST
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