singapore-airlines-to-invest-3-194-cr-in-air-india

Singapore Airlines (SIA) will make an additional investment of Rs 3,194.5 crore in Tata Group-owned Air India following the merger of Vistara in November.

 

The merger, announced on 29 November 2022, is set to be completed on 11 November 2024 and will see Singapore Airlines take a 25.1% stake in the expanded Air India.

 

Vistara, a full-service carrier that began operations on 9 January 2015, is a joint venture between Tata Group and Singapore Airlines, with SIA holding 49% of the airline’s shares.

 

On Friday, Singapore Airlines Group said its consideration for the merger includes its 49% interest in Vistara and Rs 20,585 million (Rs 2,058.5 crore) in cash, which will be exchanged for a 25.1% equity stake in the enlarged Air India.

 

SIA anticipates recognising a non-cash accounting gain of approximately 1.1 billion Singapore dollars after the merger, as well as starting equity accounting for its share of Air India’s financial results.

 

The announcement noted that the agreement includes SIA contributing its share of any funding provided by Tata before the merger's completion, along with associated funding costs up to Rs 5,020 crore. This will enable SIA to maintain its 25.1% stake in Air India.

 

“SIA’s additional capital injection is expected to be Rs 31,945 million (equivalent to SGD 498 million), reflecting Tata’s funding to Air India to date. This will be implemented post-merger and by November 2024 through the subscription of new Air India shares,” the release stated.

 

The company added that future capital injections would be assessed based on Air India’s needs and funding options available.

 

The merger of Vistara into Air India will represent a significant consolidation in India’s fast-expanding aviation sector. The combined entity will have a substantial footprint across all key air travel segments in India, encompassing domestic, international, full-service, and low-cost operations.

 

“This merger will bolster SIA’s multi-hub strategy, enabling it to maintain direct participation in India’s vast and rapidly growing aviation market,” the release said.

 

Air India and Singapore Airlines recently expanded their codeshare agreement, adding 11 Indian cities and 40 international destinations to their network.