INSUBCONTINENT EXCLUSIVE:
The Tata group and Singapore Airlines (SIA) announced on Tuesday that they had agreed to merge Vistara with Air India to drive synergies
and grab market share in the fast-growing aviation market.
After the merger, brand Vistara will cease to exist and Air India will become
consolidation exercise in the sector after it initiated the merger of AirAsia India with Air India Express earlier this year.
As part of
the deal, and in lieu of its 49 per cent stake in Vistara and fresh investment of Rs 2,059 crore in the merged entity, SIA will receive 25.1
per cent stake in the enlarged Air India, the rest will be held by the Tata group
The transaction is expected to be complete by March 2024 and will give SIA board representation in the airline.
SIA and the Tata group
have also agreed to participate in additional capital injections during FY23 and FY24 that might be required to fund the growth and
operations of the enlarged Air India
of the merger, Singapore Airlines said
Based on the pro-rate stake of the two partners, it indicates that the total capital injection into the enlarged AI will be up to Rs 20,000
SIA intends to fully fund any additional capital injections with its internal cash resources, it added.
Through this deal SIA aims to
reinforce its relations with the Tata group
SIA and Tatas tried to set up an airline in India during the mid-1990s, but the plan fizzled out due to opposition from political parties
A second opportunity came in early 2000, when the government decided to divest Air India
Again Tatas partnered with SIA for a bid but once again the plan was scuttled.
Eventually, the two parties joined hands to set up Vistara,
which took to the skies in January 2015
At present, Tatas and SIA own 51 per cent and 49 per cent stake in the airline and have invested over Rs 9,370 crore in it.
SIA said the
merger would bring significant synergies, as Air India has valuable slots and air traffic rights at domestic and international airports,
which Vistara does not have
Vinod Kannan told staff in an email that the airline would continue to grow its fleet and network from 54 to 70 by the end of 2023
entire process is completed and we have approval from the relevant competition authorities
expected to achieve a domestic market share of 75-80 per cent
In the international market, they are expected to grow from 37.8 per cent in Q2 FY23 to 50 per cent plus
