Singapore Airlines to pump additional ₹3,195 cr into Air India after Vistara merger

Singapore Airlines (SIA) will invest an additional ₹3,194 crore in Tata Group-owned Air India after the completion of the merger within November 2024 by subscribing to new Air India shares.

Vistara, a joint venture between Tata Sons and Singapore Airlines with the Indian conglomerate holding the majority 51% stake, will operate its final flight today before its merger begins on November 12.

The merger, announced by SIA and Tata Sons in November 2022, includes an agreement for SIA to contribute its share of any funding previously provided by Tata prior to the completion of the merger, together with relevant funding costs, up to ₹5,020 crore. This would allow Singapore Airlines to maintain 25.1% stake in Air India.

The Air India-Vistara merger is expected to be completed within November 2024. For SIA, the consideration comprises its 49% interest in Vistara and ₹2,058 crore in cash, in exchange for a 25.1% equity interest in the enlarged Air India.

Future capital injections will be considered based on Air India’s requirements and available funding options, the Singapore-based carrier says.

The merged entity will have a significant presence across all key Indian air travel segments including domestic, international, full-service, and low-cost operations. This will strengthen SIA’s multi-hub strategy, allowing it to continue participating directly in India’s large and fast-growing aviation market.

Air India and SIA recently agreed to significantly expand their codeshare agreement, adding 11 Indian cities and another 40 international destinations to their network. This marks the first extensive expansion of codeshare arrangements between the airlines since 2010, offering customers enhanced travel options between Singapore and India, as well as beyond. Both carriers will continue to explore ways to deepen their commercial partnership.

The Tata Group airline last year placed an order of 470 aircraft from Boeing and Airbus as part of its $70 billion fleet expansion programme. Air India’s orders include 34 A350-1000, six A350-900, 20 Boeing 787 Dreamliners and 10 Boeing 777X widebody aircraft, as well as 140 Airbus A320neo, 70 Airbus A321neo and 190 Boeing 737MAX narrowbody aircraft.

Rival IndiGo too placed the biggest aircraft order in aviation history. India’s largest domestic carrier carrier will buy 500 Airbus A320 aircraft, providing the airline a further steady stream of deliveries.

Air India is also gearing up to boost its freight and cargo capacity. The belly capacity of the Air India fleet is expected to grow significantly over the next few years, with the addition of new wide-body aircraft to its fleet and with most aircraft on order set to arrive from 2025.

Tata Group, through its subsidiary Talace, took control of Air India after the Indian government sold its entire stake in the national carrier. The steel-to-software conglomerate spent ₹18,000 crore to bag the loss-making airline.