Vistara and Air India to merge by March 2024; SIA to invest USD 250 million in entity

In a big development, Tata Group has announced the consolidation of its airlines Vistara and Air India. The merger is expected to be completed by March 2024, an official statement said.

Vistara is a joint venture of Tata Sons and Singapore Airlines (SIA), wherein the Tata Group holds a 51 percent stake in the partnership and Singapore Airlines owns a 49 percent stake. 

Singapore Airlines and Tata Sons have agreed to merge Air India and Vistara with SIA also investing USD 250 million in Air India as part of the transaction.

"This would give SIA a 25.1 percent stake in an engarged Air India group with a significant presence in all key market segments, SIA and Tata aim to complete the merge by March 2024, subject to regulatory approvals," SIA in a statement.

Singapore Airlines intends to fully fund this investment with its internal cash resources, which stood at $17.5 billion (Singapore dollars) as of September 30, 2022, the statement added.

"SIA and Tata have also agreed to participate in additional capital injections, if required, to fund the growth and operations of the enlarged Air India in FY2022/23 and FY2023/24. Based on SIA's 25.1% stake post-completion, its share of any capital injection could be upto YS $615 million, payable only after the completion of the merger," SIA said.

Tata Sons Chairman N Chandrasekaran stated that the merger of Air India and Vistara is an important milestone in making Air India a truly world-class airline.

"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," he said.

Presently, four airlines are part of the Tata Group. They are Air India, Air India Express, Vistara and AirAsia India.