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BREAKING NEWS: Air India and Vistara to merge into a single entity; Singapore Airlines to keep a stake

Tata Group has today officially announced the merger plan of Air India and Vistara with Singapore Airlines (SIA) keeping a minority stake in the merged airline.

Air India-Vistara merger confirmed!

Tata Sons and Singapore Airlines have today announced plans to merge Air India and Vistara into a single entity. Vistara is being merged into Air India after which the Vistara brand will cease to exist. The merger transaction is expected to be closed by March 2024, pending all necessary approvals.

Singapore Airlines currently has a 49% stake in Vistara while the remaining 51% is owned by the Tata Group. Upon the closure of this deal, Singapore Airlines will own a 25.1% stake in the newly merged airline while the remaining 74.9% will be owned by Tata Sons.

The airline, in a statement, said that it will invest $250 million into Air India as part of the transaction. The airline further added that it has agreed with Tata Sons to participate in additional capital injections in Air India if required to fund growth and operations over the next two financial years. SIA could spend up to $615 million based on its 25.1 per cent post-completion stake, payable after the completion of the merger. The carrier added that it would fund the growth plans through its internal cash resources. SIA said that the actual amount will depend on factors including the progress of the enlarged Air India’s business plan and its access to other funding options.

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 service across domestic and international routes. We would like to thank Singapore Airlines for their continued partnership.

said Mr. N Chandrasekaran, Chairman, Tata Sons.

Tata Sons is one of the most established and respected names in India. Our collaboration to set up Vistara in 2013 resulted 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 program, unlock its significant potential, and restore it to its position as a leading airline on the global stage.

said Mr. Go Choon Phong, Chief Executive Officer, Singapore Airlines.

Upon completion of the merger, Air India Group will have a fleet of 218 aircraft. The airline will be the largest international airline of India while it will be the second largest domestic airline in India after IndiGo.

Vistara’s plans until the closure of the merger

Until the closure of the merger, Vistara will continue to operate as an independent airline and as a rival airline to Air India. The airline will continue to expand its fleet and its network, with the airline scheduled to have 70 aircraft by the end of 2023.

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. 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.

said Vinod Kannan, CEO, Vistara.

Tatas will eventually own two airlines

Tata Group recently announced that it has bought all the remaining stake of Air Asia India from the Air Asia group, meaning that it now has a 100% stake in Air Asia India. The group has already commenced the merger of Air Asia India with Air India Express, creating one single low-cost carrier.

The merger of Air India and Vistara will create one single large full service airline. This means that after March 2024, subject to regulatory approvals being cleared and all goes according to the plan, Tata will own two airlines – Air India and Aid India Express, with Air India being a Full Service Carrier (FSC) and Air India Express being a Low Cost Carrier (LCC), similar to how Singapore Airlines is a FSC and its subsidiary Scoot is a LCC.

Featured image by Air India B787 by Wikimedia Commons and of Vistara B787 by Vistara

What do you think of Air India and Vistara merging into a single airline and the scrapping of the Vistara brand? Let me know in the comments section below.

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