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Singapore Airlines and Tata Sons to Merge Air India and Vistara

Singapore Airlines and Tata Sons have agreed to Merge Air India and Vistara, creating India’s leading airline Group. As part of the transaction, Singapore Airlines will invest INR 20,585 (S $360 million, US $250 million) in Air India.


Air India Boeing 787-8 Dreamliner - Courtesy Boeing

On Tuesday (November 29, 2022), Singapore Airlines (SIA) announced that in partnership with Tata Sons, they will merge Vistara with Air India, creating India’s leading airline Group. SIA will invest INR 20,585 million (S $360 million, US $250 million) in Air India as part of the transaction, resulting in a 25.1 percent stake in the Group. SIA and Tata plan on completing the merger by March 2024, subject to regulatory approvals and customary closing conditions. SIA’s investment in the Group will be funded with internal cash resources, which totaled S $17.5 billion (US $12.9 billion) at September 30, 2022.


In Tuesday’s announcement, Singapore Airlines’ Chief Executive Officer, Mr. Goh Choon Phong, said,


“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.” Also commenting on the merger agreement, Tata Sons’ Chairman, Mr. Natarajan Chandrasekaran, 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.”

Both SIA and Tata have agreed on additional capital infusions, if necessary, to fund an enlarged Air India in FY2022/23 and FY 2023/24. Based on SIA’s 25.1 percent post-merger stake in the Group, the additional capital injection could total up to INR 50,200 (S $880 million, US $615 million). The merger will bolster SIA’s presence in India and strengthen their multi-hub strategy, allowing the company to directly participate in India’s large and rapidly expanding market. The transaction is also expected to bring significant synergies, as Air India has valuable slots and air traffic rights at domestic and international airports that are not currently available to Vistara. At the same time, Air India will benefit from Vistara’s operational capabilities, customer base and a focus on product excellence and customer service.


Combined, Air India (including Air India Express and AirAsia India) and Vistara currently have a fleet of 218 widebody and single aisle aircraft, and serve 38 international and 52 domestic destinations. Once the merger is completed, Air India will be the only Indian carrier to offer both full-service and low-cost passenger services. Currently, SIA and Tata hold a 49 percent and 51 percent stake in Vistara respectively, while Tata wholly owns Air India, including Air India Express and AirAsia India.



Source: Singapore Airlines

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