Tata Group Announces Merger of Vistara with Air India by March 2024

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The Tata Group on Tuesday made an important announcement regarding the Vistara-Air India merger, in which Singapore Airlines will retain a 25.1% stake in Air India. Following statutory approvals, the agreement will be finalized by March 2024.

It is worth noting here that the Tata Group currently owns 51% of Vistara, with Singapore Airlines owning the remaining 49%.

Air India-Vistara Merger

In a statement, SIA stated that Vistara and Air India would be merged and that it would invest Rs 2,058.5 crore in Air India as part of the transaction. Singapore Airlines has also confirmed that the investment will be funded through internal cash reserves.

In another statement, the Tata group said that with the consolidation, Air India would 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”.

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SIA and Tata Sons have also agreed to participate in additional capital injections, if necessary, to fund the expanded Air India’s growth and operations in FY2022-23 and FY2023-24.

“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 (S$ 880 million, US$ 615 million), payable only after the completion of the merger,” SIA said in the release.

The actual amount will be determined by a variety of factors, including the progress of the enlarged Air India’s business plan and its access to alternative funding sources. SIA intends to fund any additional capital injections entirely with internal cash resources.

The merger of Vistara and Air India, according to Tata Sons Chairman N Chandrasekaran, is an important step toward making Air India a truly world-class airline.

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Tata Group now part of four airlines

After acquiring the national carrier of India, Air India, and Air India Express in January of this year, Tata Group is now a part of four airlines, which also include Vistara and AirAsia India.

Vistara began operations in January 2015. AirAsia India began operations in 2014, while Air India Express began operations in 2005.

Recently, the Tata Group announced plans to merge low-cost airline AirAsia India with Air India Express, a subsidiary of Air India Limited that is now owned by Tata.

On October 13, SIA stated that it was in “confidential discussions” with the Tata group to look into the possibility of a Vistara-Air India merger.

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The discussions seek to deepen the existing partnership between SIA and Tata and may include a potential integration of Vistara and Air India,” it had said in a filing to the Singapore Stock Exchange.

SIA Chief Executive Officer Goh Choon Phong said that with this merger, SIA has an 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 on the global stage,” he added.

(Source: With inputs from PTI)

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