Singapore Airlines and Tata agree to merge Vistara, Air India
What's the story
Singapore Airlines (SIA) and Tata Sons have agreed to merge Vistara and Air India. As part of the deal, SIA will get a 25.1% stake in an enlarged Air India.
SIA will invest $250 million in Air India as part of the transaction. Both parties aim to complete the deal by March 2024, subject to regulatory approval.
Merger
SIA and Tata Sons have agreed to additional capital injections
The merger of Vistara and Air India will give India's national carrier a presence in key market areas.
SIA and Tata Sons have agreed to additional capital injections, of which SIA's share could go up to $615 million.
It is only payable after the completion of the merger. The actual amount will depend on enlarged Air India's business plan and other funding options.
Official words
Merger an important milestone: N Chandrasekharan
Commenting on the merger, N. Chandrasekharan, Tata Sons chairman, said, "The merger of Vistara and Air India is an important milestone in our journey to make Air India a truly world-class airline."
"We are transforming Air India, with the aim of providing great customer experience, every time, for every customer. We would like to thank Singapore Airlines for their continued partnership," he added.
Meaning
What does the merger mean for Air India?
Over the past few months, Air India and Vistara have been competing for the number two spot in India. In the last month, the difference between the two was just 0.1%, with Air India trailing behind.
In terms of actual passengers, that's a difference of 11,000. The merger will make Air India the largest international and second-largest domestic carrier after Indigo.
SAI & Vistara
Business as usual for all stakeholders until integration: Vistara
Goh Choon Phong, SAI's CEO, said that the merger will deepen the relationship with Tata. "We will work together to support Air India's transformation program, unlock its significant potential, and restore it to its position as a leading airline on the global stage," he added.
Vistara CEO Vinod Kannan said that integration "will take some time" and until then, it'll be business as usual.