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HomeAirline NewsSingapore Airlines, Tatas discuss possible merger of Vistara and Air India

Singapore Airlines, Tatas discuss possible merger of Vistara and Air India

Singapore Airlines Ltd (SIA) is in confidential talks with the Tata group to explore a potential merger of Vistara, their joint venture, with Air India to give the Singaporean carrier a greater foothold in South Asia. Discussions seek to deepen the existing SIA-TATA partnership and may also include the possible integration of Air India and Vistara.

The Tatas have a 51% stake in Vistara and the remaining 49% is with SIA. The Tatas also own Air India.

SIA said in a statement that no definitive terms had been agreed for the deal, which would create a more formidable competitor to the country’s dominant airline IndiGo, as well as Middle Eastern rivals that carry a large share of India’s international traffic.

“In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in respect of the securities of Vistara and Air India Ltd, a subsidiary of Tata (“the potential transaction”).

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

The Singapore-based carrier, which operates full-service carrier Vistara, said India has strong domestic and international traffic flows that are expected to double in a decade, compared to the more mature domestic market.

Tata owns all of Air India after completing the purchase of India’s previously state-owned national carrier in January.

SIA, which has been focused on repairing its balance sheet, did not participate in the bidding process, but Campbell Wilson, a former executive at the Singapore carrier, took over as Air India’s new chief executive in July.

The Indian airline is rebuilding its fleet and targeting a domestic market share of at least 30% in the next five years as it seeks to repair its reputation after years of losses.

It is also launching more service to North America, where it has shorter flight times than rivals that have avoided it since Moscow launched its invasion of Ukraine in February, thanks to its use of Russian airspace.

“Turning the stake in Vistara into a stake for the Tata-led aerospace group makes sense,” said Brendan Sobie, an independent analyst based in Singapore. “The formation of this group will enhance the position of all Tata airlines and SIA investments in the Indian market.”

Air India and Tata, which also controls low-cost carrier AirAsia India, did not immediately respond to requests for comment.

Shukor Yusof, head of Malaysian aviation consultancy Endau analytics, said SIA does not have a good track record in mergers and acquisitions.

It owned a 20% stake in Virgin Australia, which was wiped out after the Australian carrier entered voluntary administration in 2020.

In 2012, SIA sold its 49% stake in Virgin Atlantic to Delta Air Lines for $360 million, well below its initial purchase price of £600 million in 2000.

“While the pact with Tata on Vistara seems to be working well, Air India’s bite may be more than it can chew,” Shukor said. “But India is the next frontier in aviation with a closed and slowing China and SIA can afford to take a stab and lose millions if it doesn’t work out.”

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