Mumbai: With the objective to optimize resources and also to challenge other industry competitors, Tata group and Singapore Airlines are planning to merge their airline businesses Air India and Vistara and housing them under a new joint venture. Sources close to the development told Live Mint that the two companies are planning to merge Tata SIA Airlines Ltd, their joint venture which operates Vistara, and Air India, which Tata group acquired last year.Also Read – Fish Curry, Scrambled Egg And Much More: Air India Introduces New Menu For Domestic Passengers | Deets Here
Singapore Airlines could hold 25% share in the new venture
As per the report, Singapore Airlines in the new joint venture could hold a minority stake of as much as 25 per cent in Air India and Vistara. Also Read – Bomb Threat on IndiGo Flight at Mumbai Airport Turns Out to be Hoax, Security Agencies on High Alert
“SIA (Singapore Airlines) is Tata Sons’ current JV partner in Vistara. Talks are going on between the two JV partners on how best to leverage the future India opportunity in aviation. What corporate structure will emerge is still under discussion,” one of the two people cited above told LiveMint. Also Read – Air India Slashes Its Senior Citizen And Student Concessions From 50 Per Cent to 25 Per Cent
Merge could take 1 year to complete
As per the report, the merge plan could take about a year to complete and is a part of Tata Sons’ consolidation strategy to save costs, build synergies by optimizing aircraft utilization and routes, and also to gain market share to compete with IndiGo.
The report also stated that SIA could hold a minority stake worth Rs 5,000 – Rs 10,000 crore in the new JV.
“According to a recent internal exercise, the combined valuation of Air India and Vistara could be at least Rs 30,000 crore,” said the second person, as quoted in the report.
Prior to this, Vistara CEO Vinod Kanan had told Hindustan Times that all possibilities of a merger between Air India and Vistara were being discussed. However, he did not provide any further clarity on the matter.
Earlier this year, the Tata Group had acquired Air India from the government at a cost of Rs 18,000 crore, and also got the authority to operate Air India Express. Notably, the Tata Group owns 83.67 per cent ownership in AirAsia India and a holds 51 per cent shares in Vistara.