Singapore Airlines (SIA) is set to make a significant additional investment of Rs 3,194.5 crore in Air India, owned by Tata Group, as part o...
Singapore Airlines (SIA) is set to make a significant additional investment of Rs 3,194.5 crore in Air India, owned by Tata Group, as part of the merger between Vistara and Air India. The merger, originally announced on November 29, 2022, and expected to be completed on November 11, 2024, will result in Singapore Airlines holding a 25.1% equity stake in the expanded Air India entity.
The merger with Vistara, a full-service carrier that began operations on January 9, 2015, marks a strategic consolidation within India’s rapidly expanding aviation industry. Vistara has been a joint venture between Tata Group and Singapore Airlines, with SIA previously holding a 49% stake in the airline.
As part of the merger terms, Singapore Airlines’ 49% interest in Vistara will be exchanged for a 25.1% stake in the enlarged Air India, along with a cash consideration of Rs 20,585 million (Rs 2,058.5 crore). Additionally, SIA anticipates a non-cash accounting gain of approximately 1.1 billion Singapore dollars and will begin equity accounting for its share of Air India’s financial performance.
Strategic Capital Injection and Future Funding
To maintain its stake, Singapore Airlines has committed to an additional capital injection of Rs 31,945 million (around SGD 498 million) following the merger completion, scheduled within November 2024. This capital infusion will be achieved through subscription to new Air India shares, based on Tata’s existing funding for Air India.
According to SIA, future capital contributions will be evaluated based on Air India’s requirements and available financing options. The infusion is expected to support Air India’s growth and enhance SIA’s multi-hub strategy, allowing the airline to capitalize on India’s fast-growing aviation market.
Expansion in Codeshare Network
Alongside the merger, Air India and SIA have recently expanded their codeshare agreement to bolster network connectivity. This agreement will add 11 Indian cities and 40 international destinations to their shared network, enhancing travel options for passengers across both airlines.
The Vistara-Air India merger represents a transformative shift in India’s aviation landscape, combining strengths across domestic, international, full-service, and low-cost segments. For Singapore Airlines, this move fortifies its multi-hub approach, enabling direct participation in India’s expanding air travel market and positioning both airlines for growth in a dynamic industry.
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