Singapore Airlines will invest an additional INR 3,194.5 Crore in Tata Group’s Air India after the merger of Vistara, which took place in November. The merger will be completed on 11/11/2024. It was announced on 29 November 2022.
The full-service carrier Vistara began flying on 9 January 2015 and is a joint venture of Tatas Airlines and Singapore Airlines. Singapore Airlines holds a 49 percent shareholding.
Singapore Airlines Group (SIA Group) on Friday announced that it would be exchanging its 49 percent stake in Vistara for INR 20,585 Million (INR 2,058.5 Crore) in cash, in exchange for a 25,1 per cent equity share in the enlarged Air India.
SIA will recognise a non cash accounting gain of approximately 1.1 billion Singapore Dollars and begin equity accounting for its share in Air India’s financial performance.
According to a press release issued on Friday, SIA will contribute its share of any funding provided to Tata prior completion of the merger. This includes relevant funding costs, up to INR 5 020 crore, which would allow SIA maintain a 25.1% stake in Air India.
SIA’s capital injection will be approximately INR 31,945 (equivalent of SGD 498) based on Tata funding to Air India up to this point. This will be done after the merger has been completed and by November 2024, through the subscription of new Air India shares.
“Future Capital Injections will be considered depending on Air India’s requirements and funding options available,”
according to a release issued when announcing the airline’s financial performance for six months ending September 2024.
The merger of Vistara and Air India will be a major consolidation for the rapidly growing Indian aviation industry. SIA stated that the merged entity is expected to have a strong presence in all major segments of Indian aviation, including domestic and international travel, full service, and low cost operations.
“This will strengthen SIA’s strategy of multi-hubs, allowing it continue to participate directly in India’s vast and rapidly growing aviation markets,” it added.
Air India and SIA recently agreed on a significant expansion of their codeshare agreement. They will now be adding 11 Indian cities to their network and 40 more international destinations.
