Vistara to merge with Air India; Singapore Airlines to have 25.1% stake
With Tata Sons as majority owner, Singapore Airlines will own around 25 per cent of enlarged Air India, into which it'll infuse over Rs 2,000 crore. The merger, which is aimed to be completed by March 2024, will give SIA a 25.1% stake in an enlarged Air India group with a significant presence in all key market segments.
Singapore Airlines (SIA) and Tata Sons have decided to merge Air India and Vistara, with SIA also investing Rs 2,058.5 crore (US $250 million) in Air India as part of the deal. According to the reports, the merger, which is anticipated to close in March 2024, would offer SIA a 25.1% ownership in an expanded Air India group that will have a sizable presence in all important market categories.
Tata currently owns 49 percent of Vistara, while SIA currently owns 51 percent of the company. Earlier this year, the latter purchased Air India from the Indian government for Rs 18,000 crore.
According to the information in the announcement, SIA and Tata have also committed to take part in additional capital infusions, if necessary, to finance the expansion and operations of the larger Air India in the fiscal years 2022–2023 and 2023–2024.
In recent months, Air India and Vistara have been battling it out for second place in Indian airspace. Vistara was able to hold the position for four months in a row, but it was unable to surpass the 10% threshold in October as it had in July.
Through this deal, SIA will strengthen its relationship with Tata and get an instant strategic position in a company that is four to five times bigger than Vistara in terms of size. The transaction is anticipated to boost SIA's position in India, support its multi-hub strategy, and enable it to continue directly competing in a sizable and quickly expanding aviation market.
Low-cost airlines Air India Express and AirAsia India, both of which will be integrated under the Air India name by 2024, are also owned by Tata Sons. This means that Air India, a business that the Tatas created but then nationalised before returning to the Tatas as losses mounted and the government thought it would be best to sell it off, is now the umbrella company for all four brands.