Singapore Airlines (SIA) and Tata Sons (Tata) have agreed to merge national carrier Air India and full-service airline Vistara by March 2024, according to SIA’s board of directors.
In a statement, Singapore Airlines said it would become a 25.1 per cent owner of Air India as part of a deal that would merge its Vistara joint venture with Tata Sons into Air India.
Singapore Airlines stated that as part of the transaction, SIA will invest $250 million in Air India, with the pair aiming to complete the merger by March 2024, subject to regulatory approvals.
Singapore Airlines and Tata have also agreed to participate in additional capital injections, if necessary, to fund the expanded Air India’s growth and operations in FY2022-23 and FY2023-24.
Based on SIA’s post-completion 25.1 per cent stake, its share of any additional capital injection could be up to $50,200 million, payable only after the merger is completed.
The actual amount will be determined by factors such as the progress of the enlarged Air India’s business plan and its access to alternative funding sources. According to the statement, SIA intends to fund any additional capital injections entirely with internal cash resources.
Through this transaction, SIA will strengthen its partnership with Tata and gain an immediate strategic stake in an entity four to five times the size of Vistara.
The merger would strengthen SIA’s presence in India, strengthen its multi-hub strategy, and enable it to continue directly participating in a large and rapidly growing aviation market.
“Tata Sons is one of the most established and respected names in India,” said Goh Choon Phong, Chief Executive Officer of Singapore Airlines. Our collaboration in establishing Vistara in 2013 resulted in a market-leading full-service carrier that has received numerous global accolades in a short period of time.
He added, “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.”
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