It is almost certain that India’s Vistara will merge with Air India.
Singapore Airlines (SIA) will have a 25.1% stake in the merged entity. This is possible with an additional investment of Rs 20,585 billion (S$360 million).
After the merger, Tata Group will be the largest shareholder in Air India with 74.9% stake. This is made possible by an investment equivalent to S$1.07 billion.
Tata Group now owns 51% stake in Vistara. SIA has a 49% stake in it.
There is also the possibility that Singapore’s capital in the new Air India group could increase by a further Rs 50.2 billion (S$880 million). The increase is likely to happen if the Air India Group raises additional funds from its shareholders for restructuring and expansion.
The Vistara-Air India merger is expected to be completed by March 2024. This additional investment is likely to take place only after this.
SIA and Tata formed Vistara in 2013 with an investment of around S$100 million.
However, SIA’s investment in Vistara has grown to about S$900 million over time, according to the company’s own annual reports.
Yesterday’s announcements confirmed that Tata will merge all its airlines under Air India and Air India Express.
The Tata-Singapore partnership will then become one of India’s largest airline conglomerates. It will have 23% market share.
SIA said the merger will strengthen its presence in India and strengthen its multi-travel hub strategy.