Singapore Airlines gets India’s FDI approval for Air India-Vistara merger
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SIA will hold a 25.1 per cent stake in the enlarged Air India Group after the merger.
PHOTOS: REUTERS
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SINGAPORE - India cleared the last roadblock to national carrier Air India’s merger with smaller rival Vistara, by approving foreign direct investment (FDI) by Singapore Airlines (SIA) into the new combined carrier.
SIA will hold a 25.1 per cent stake in the combined Air India group in return for a 20.585 billion rupee (S$320 million) investment.
The Singapore carrier is due to invest up to 50.2 billion rupees after the merger is completed.
Vistara said separately on Aug 30 that its planes would be operated by Air India from November. From Sept 3, it will not be possible to book with Vistara for travel on or after Nov 12.
“All Vistara aircraft thereafter will be operated by Air India and bookings for the routes operated by these aircraft will be redirected to Air India’s website,” it added.
SIA, which owns 49 per cent of Vistara in a joint venture with India’s Tata Group, said earlier on Aug 30 that it expects the merger, which Indian and Singaporean antitrust regulators have cleared, to be completed by the end of 2024.
That is delayed from the original target of March, and SIA said the companies were in talks about an extension to the deal’s agreed stop date of Oct 31.
Air India staff have been working for months with Vistara on the transition and look forward to offering an expanded network, more flight options and an improved frequent flier programme, the flag carrier’s chief executive Campbell Wilson said in a statement.
The merger will give SIA greater exposure to one of the world’s fastest-growing travel markets and make it the only foreign player to have a significant stake in one of the country’s airlines.
Global airlines are expanding flights to the country and Indian airlines in 2023 placed record orders for hundreds of new planes.
The deal also widens SIA’s reach beyond its smaller home market, with its reliance on international travel hurting the company during the Covid-19 pandemic. The carrier has wrapped up a flurry of tie-ups in recent years including joint-venture deals with neighbours Malaysia Airlines and more recently Garuda Indonesia. It is also seeking a similar pact with Japan’s All Nippon Airways.
The Air India-Vistara merger, more than 18 months in the making,
Ongoing airline transactions include Alaska Air Group’s and Hawaiian Holdings’ US$1.9 billion (S$2.5 billion) merger, and Korean Air’s US$1.4 billion bid for smaller rival Asiana Airlines.
Not all proposed deals have succeeded however, with US carriers JetBlue and Spirit abandoning a US$3.8 billion pact and IAG terminating a bid to take over Spain’s Air Europa.
Air India – which includes low-cost carriers Air India Express and AirAsia India – is wholly owned by Tata Sons. It took over Air India in 2022 and embarked on a multimillion-dollar transformation of the former state-run airline.
Shares of SIA closed seven cents, or 1.1 per cent higher, at $6.28 on Aug 30.
BLOOMBERG, REUTERS
