Air India-Vistara Merger Process Begins, to be Complete by March 2024 - Report

One completed, Singapore International Airlines will retain a 25.1 per cent stake in the Air India, against 49 per cent stake in Vistara currently.

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Within a few days of announcing a mega 840 aircraft deal with Airbus and Boeing, the Tata group has now initiated the merger process between Air India and Vistara. As per a report on the The Economic Times, Tata Group has roped in consultancy major Deloitte and Law firm AZB Partners for regulatory and legal compliance. Announced last year, the merger will take final shape by March 2024 as the process will need approvals from competition regulators of the countries where both the airlines operate, the report said. The Singapore International Airlines would be investing Rs 2,058.5 crore in Air India as part of the transaction. 

Singapore Airlines will retain a 25.1 per cent stake in the Air India post the merger is completed. Currently, Tata group holds a 51 per cent stake in Vistara, whereas the remaining 49 per cent stake is with Singapore Airlines. Also, Singapore Airlines has confirmed that it will fund the investment through its internal cash resources.

In a separate release, 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". With the addition of 470 firm aircraft and 370 options, Air India and Vistara will have close to 1,000 aircraft over a period of the next decade.

SIA and Tata Sons 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 50,200 million (S$ 880 million, US$ 615 million), payable only after the completion of the merger," SIA said in the release.

Tata Sons Chairman N Chandrasekaran said the merger of Vistara and Air India is an important milestone in the journey to make Air India a truly world-class airline. "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 service across domestic and international routes," he said.

Four airlines are now part of the Tata group - Air India, Air India Express, AirAsia India and Vistara - making it the biggest aviation conglomerate in India. Vistara started flying in January 2015, while AirAsia India was launched in 2014, and Air India Express began operations back in 2005.

On October 13, SIA said it was in "confidential discussions" with Tata group to explore the possible merger of Vistara and Air India. "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.

Talking about the merger, Vistara CEO, Vinod Kannan said, "We, at Vistara, take immense pride in embarking on this journey. Vistara is a fine manifestation of its parent brands Tata Sons and Singapore Airlines, and we are delighted that we will continue to be guided by their legacies as we merge with Air India. Vistara, within a short span of almost eight years, has created a unique space for itself, setting new standards in the Indian aviation market and earning extensive goodwill from millions of customers around the world. Air India is a legendary brand with a rich legacy that pioneered civil aviation in India.

There is enormous potential for an airline group with the scale and network of the combined entity. We look forward to providing more opportunities for our customers, employees, and partners, while putting a spotlight on Indian aviation at the global stage. The integration process will take some time, and during this phase it will be business as usual for all our stakeholders including customers. We will continue to share relevant information with all of them, as appropriate."

With inputs from PTI