Indian conglomerate Tata Group is merging Air India with Vistara, its joint venture with Singapore Airlines (SIA), to create a larger full-service carrier that will strengthen its presence in domestic and international skies.
Automotive-steel conglomerate Tata will own 74.9% of the combined entity, while SIA will own the remaining 25.1%, the Indian group said in a statement on Tuesday.
Tata said that SIA will invest $252 million in Air India as part of the deal, with the pair aiming to complete the merger by March 2024, subject to regulatory approvals including India’s Ministry of Aviation, the central bank and the antitrust watchdog.
Tata Group Chairman N Chandrasekaran said the merger was essential in rebuilding Air India into a “world-class airline”.
“Air India is focused on growing its network and fleet, revamping its customer proposition, improving safety, reliability and on-time performance,” Chandrasekaran said.
Air India, with its Maharajah mascot, was once known for its lavishly decorated planes and stellar service. But his reputation declined in the mid-2000s as financial difficulties mounted. It was criticized for poor business class seats, customers faced delays, and staff and vendors were not always paid on time.
The airline, founded by JRD Tata in 1932 and nationalized in 1953, returned to Tatas control in January.
The proposed merger will create a stronger rival for India’s dominant carrier IndiGo and give SIA, which has no domestic air market, a stronger footing in one of the fastest-growing aviation markets in the world. world.
SIA said in a separate statement that it and Tata have agreed to inject additional capital into Air India if needed to fund growth and operations over the next two financial years. SIA said it could spend up to $615 million based on its 25.1% stake after completion, payable after the merger is signed
Vistara, in which SIA has a 49% stake, is an integral part of its multi-hub strategy, the Singaporean airline said in a statement to its local stock exchange.
The proposed deal would give SIA “immediate exposure to an entity four to five times the size of Vistara”, with access to slots and air traffic rights at major Indian and international airports, he said. added.
The deal will see Tata consolidate its brands around full-service Air India and low-cost Air India Express, which is being merged with AirAsia India after the Indian group acquired former partner AirAsia.
Tata’s combined airlines will have an Indian market share of 24%, making it the largest national carrier after IndiGo, which has a 56% share, and a stronger competitor to full-service Middle Eastern competitors. which carry a large share of international traffic.
This will give Tata a fleet of 218 planes, split between aircraft manufacturers Boeing and Airbus, serving 38 international and 52 domestic destinations. This will make it India’s largest international carrier.
Air India plans to lease 30 Boeing and Airbus aircraft, increasing its fleet by more than 25% in the short term. It is also considering a mega-order for up to 300 narrowbody jets and 70 widebody jets, industry sources say.
