NEW DELHI, Nov 29: Airline Vistara is merging with Air India by March 2024,
the company announced on Tuesday. Singapore Airlines (SIA) owns minority share
of 49% stake in Vistara, a joint venture with the Tata Group, which owns the
rest of 51%.
After the merger, Singapore Airlines' 49% stake will become 20.6% in the enlarged
Air India. According to the companies Act, a shareholder will need to have 25%
stake for a decisive voting right in the company's affairs. Therefore, Singapore
Airlines will pay Rs 2,058.5 cr cash to acquire additional 4.5% on merger.
Thus, Singapore Airlines will hold 25.1% of the shares of enlarged Air India, which
was recently acquired by the Tatas from the Government of India for Rs 18,000
crore during the disinvestment drive.
The transaction will also increase the presence of Singapore Airlines in the Indian
aviation market.
Tata Sons chairman N Chandrasekharan said it is "an important
milestone in our journey to make Air India a truly world-class airline".
The joint venture of Tata Sons and Singapore Airlines, Vistara, was set up
in 2013. Vistara is an Indian full-service airline, based in Gurugram and operated
by the JV, Tata SIA Airlines Limited. On January 9, 2015, Vistara started its
operations with a maiden flight from Delhi to Mumbai.
"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. We would like to thank Singapore Airlines for their continued partnership,"
Vistara CEO Vinod Kannan said.
During the period of transition the "it will be business as usual for all our
stakeholders including customers", Kannan said. He sought to allay the concerns
of the employees about their future post-merger.
The enlarged Air India will be a challenge to Indigo, the market leader, as
a large fleet will be coming under one umbrella. It will also seize a larger
share in the international aviation market.
Air India's 113, AirAsia India's 28, Vistara's 53 and Air India Express's 24
carriers will come together under one umbrella, Air India. The Air India fleet
size will increase to 218 so also its business.
