The Tata Group and Singapore Airlines have fast-tracked the decision to merge Tata SIA Airlines (Vistara), as per sources. In the new joint venture (JV), Singapore Airlines could hold a minority stake of as much as 25 percent in Air India and Vistara while Air India can hold a stake worth INR 50 bn to INR 100bn, reports LiveMint.
Currently, talks are ongoing between the Tata Group and Singapore Airlines on how best to leverage the future India opportunity in aviation, optimise the resources, and meet the market competition, sources reveal.
This merger is believed to be a part of Tata Son’s consolidation strategy to save costs, build synergies by optimising aircraft utilization and routes, and gain market share to better compete with IndiGo. The merger may take about a year to materialise.
The combined valuation of Air India and Vistara is projected to be INR 3000 million, as per sources.
It is said that post-merger Air India and Vistara will retain their brand identities but eventually, one brand will stand out as the dominant one.
Vistara is a 51:49 JV between Tata Sons and Singapore Airlines. Hence it enjoys privileges like regular fund infusions from both partners to expand operations. Tata Sons invested INR 2000 million into Vistara in February 2022 along with Singapore Airlines, which invested almost the same amount. Vistara received an equity infusion of Rs 7bn from Tata Sons and Singapore Airlines in August 2021. Prior to that, it received INR 4bn from the two owners in May 2021.