Tata Sons, Singapore Airlines announce merger of Air India-Vistara

Tata Sons and Singapore Airlines (SIA) announced on Tuesday that they have agreed to merge Air India and Vistara. The merger is expected to be completed by March 2024 subject to regulatory approvals.

This will create an enlarged Air India group, comprising Air India, Air India Express, AirAsia India and Vistara. The group is already in the process of merging Air India Express and AirAsia India into one entity that will provide low-cost flight options.

SIA will invest nearly Rs 2,058.5 crore, valuing the new Air India at about $1 billion. It will get a 25.1% stake in the merged entity and Tata Sons will hold the remaining 74.9% stake.

“SIA intends to fully fund this investment with its internal cash resources, which stood at $17.5 billion as of 30 September 2022. 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 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 5,020 crore ($615 million), payable only after the completion of the merger,” SIA said in a statement issued Tuesday.

“Through this transaction, 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 compared to Vistara. The merger would bolster SIA’s presence in India, strengthen its multi-hub strategy, and allow it to continue participating directly in a large and fast-growing aviation market,” the airline further added.

“Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time. 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.” Goh Choon Phong, Chief Executive Officer, Singapore Airlines, was quoted in the 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 transforming Air India, with the aim of providing great customer experience, every time, for every customer. As part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, enhancing safety, reliability, and on-time performance. We are excited with the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes.We would like to thank Singapore Airlines for their continued partnership,” Natarajan Chandrasekaran, Chairman, Tata Sons, was quoted in the statement.

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