Tata Sons plans to invest $1.5 to $1.8bn in the new airline to be created after the Air India-Vistara merger, Mint reports. The investments will be made from the proceeds received as dividend income from Tata Consultancy Services (TCS) and other firms of the group.
According to sources, the board of Tata Sons has to decide on the exact amount to be invested in Air India-Vistara, among other initiatives by Tata group. A significant portion could be set aside for investment into Air India-Vistara combined.
The funds will be used mostly for fleet expansion, improve customer service, international expansion and increasing Air India’s market share beyond 30%. The infusion of funds is expected to start in the Q1 of 2023-24.
About 80% of the Tata Sons' dividend income comes from TCS. The report also said that the capital being considered to be infused into the entity is equivalent to 50-60 per cent of the dividend income received from TCS in FY23.
Air India, on the other hand, is expected to seal half of an order worth billions of dollars for 495 jets with Boeing and General Electric and CFM International soon. These will have 190 Boeing 737 MAX narrowbody planes as well as some 20 Boeing 787s and 10 Boeing 777Xs.
Interestingly, Air India has completed one year today with the take-over by Tata Group. Although the year was full of ups and downs for the airline, the average daily flights of the carrier have increased by 30%, with the total number of active airplanes increasing by 27% to 100. The weekly international flights are up by 63%, with the airline launching or announcing 16 new offshore routes and increasing frequencies on nine others. Its daily revenue has doubled, and the daily passenger uplift has increased by 72% with a significant improvement in the on-time performance.