Singapore Airlines and Tata Sons have agreed to merge Air India and Vistara. Singapore Airlines is also investing INR 20,585 million (S$360 million) in Air India as part of the transaction, giving it a 25.1% stake in an enlarged Air India Group. Both parties aim to complete the merger by March 2024, subject to regulatory approvals. Campbell recently joined Air India this year as its new CEO after resigning as the CEO of Scoot, Singapore Airlines’s low cost carrier.
Singapore Airlines and Tata Sons collaborated to set up Vistara in 2013 resulting 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,” shared Mr Goh Choon Pong, Chief Executive Officer of Singapore Airlines.
Singapore Airlines intends to fully fund this investment with its internal cash resources. As of 30 September 2022, SIA has S$17.5 billion in its internal cash resources. Both parties have agreed to participate in additional capital injections if required, to fund the growth and operations of the enlarged Air India in FY 2022/23 and FY 2023/24. Based on SIA’s 25.1% stake post-completion, its share of any additional capital injection could be up to INR 50,200 million (S$880 million), payable only after the completion of the merger. The actual amount will depend on factors including the enlarged Air India’s business plan progress, as well as its access to other funding options.
The merger of Air India and Vistara sees Air India’s valuable slots and air traffic rights at domestic and international airports that are not available to Vistara. Air India will benefit from Vistara’s operational capabilities, customer base, and a strong focus on customer service and product excellence.
India is the world’s third-largest aviation market. Demand for air travel is surging with passenger traffic expected to more than double over the next 10 years. Rising income levels and ongoing investments in its aviation infrastructure support this. India also remains underserved with low international seats per capita according to Airbus and Boeing forecast. There is great growth potential.
Air India was acquired by Tata in January 2022. A wide-ranging transformation programme to strengthen its foundations was unveiled to strengthen its foundations and revamp its operations.
Air India, Air India Express and AirAsia India as well as Vistara have a total of 218 widebody and narrowbody aircraft, serving 38 international and 52 domestic destinations.
Mr Natarajan Chandrasekaran, Chairman, Tata Sons, said: “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.”