SIA, Tatas In Talks Over Vistara-Air India Merger

Currently, Tata group holds a 51% stake in Vistara, while Singapore Airlines owns 49%.

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“The discussions seek to deepen the existing partnership between SIA and Tata and may include a potential integration of Vistara and Air India,’’ Singapore Airlines said in a filing to the Singapore Stock Exchange.

The “confidential discussions" are underway, and no definitive terms have been agreed upon between the parties, it added.

The discussions are in line with its multi-hub strategy to secure access to important sources that complement its strong Singapore hub, the airline said.

Mint reported on 27 September that Singapore Airlines and Tata group plan to merge Vistara—their nine-year-old joint venture—and Air India Ltd, a Tata group company.

The report said Air India and Vistara would be held under a new JV, in which Singapore Airlines may hold up to 25% with an investment of ₹5,000-10,000 crore.

An internal exercise has arrived at a combined valuation of at least ₹30,000 crore for the airline combo, the report said.

There is no certainty of any definitive agreement or that the potential transaction will materialize or proceed to completion, Singapore Airlines said.

Even if a transaction were to materialize, it would be subject to the relevant regulatory approvals, it added.

Currently, Tata group operates four airlines—Air India, Air India Express, AirAsia India, and Vistara.

Tata Sons is working on an airline consolidation strategy to save costs, build synergies by optimizing aircraft utilization and routes, and gain a larger market share to take on IndiGo, India’s biggest airline, with a market share of 59%. However, a merger of Air India and Vistara may take about a year to complete.

The potential merger may not only provide economies of scale to both Vistara and Air India but also open up access to dozens of new slots globally for Singapore Airlines on the one hand and help Tata Sons consolidate its aviation business balance sheets on the other.

Air India and Vistara are expected to retain their individual brand identities post-merger, though eventually, only one brand may remain.

Singapore Airlines said that India has strong domestic and international traffic flows, which are expected to more than double over the next 10 years.

“Shareholders and potential investors are advised to exercise caution when dealing or trading in the securities of the company. The company will make the necessary announcements as appropriate or when there are any material developments regarding the potential transaction in compliance with the relevant provisions of the Listing Manual of the Singapore Exchange Securities Trading Ltd," the airline further said.

As part of the consolidation, AirAsia India is also expected to be merged into Air India Express, a senior official aware of the merger talks said.

Tata Sons holds a majority 83.67% stake in AirAsia India, which started flying in June 2014, while the remaining 16.33% is with the Malaysian airline group AirAsia. The Tata group acquired Air India and Air India Express in January 2022 under a government-led strategic divestment programme.

“It remains to be seen what brand they decide on for the JV. While Tatas have to retain the Air India brand for at least five years, it is too big a brand as compared to Vistara," the official mentioned above said.