Tata plans to merge carriers under Air India, scrap Vistara brand: Sources

Tata was selected as the winning bidder for Air India in October last year after beating rival suitors with a US$2.4 billion (S$3.3 billion) offer. PHOTO: REUTERS

SINGAPORE – The Tata Group is considering a plan to integrate its four airline brands under Air India, people with knowledge of the matter said, as the sprawling company prepares to rebuild its faltering aviation empire.

India’s largest conglomerate is also considering scrapping the Vistara brand, which is Singapore Airlines’ (SIA) local affiliate in the South Asian nation, the people said, declining to be identified because the discussions are private.

SIA is evaluating the size of the stake it should take in the combined entity, one of the people said.

Representatives for the Tata Group, Air India and Vistara did not respond to requests for comment.

SIA said in a statement that “discussions are ongoing between SIA and Tata” and that it had nothing further to add beyond an Oct 13 exchange filing, which said the talks “seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India”.

Tata was selected as the winning bidder for Air India in October last year after beating rival suitors with a US$2.4 billion (S$3.3 billion) offer. The transaction marked the country’s most high-profile privatisation under Prime Minister Narendra Modi, ending decades of attempts to offload the money-losing, debt-laden carrier that survived on years of taxpayer bailouts.

It also meant that Tata now has four airline brands – Air India and other full-service carrier Vistara, along with budget carriers Air India Express and AirAsia India. Air India earlier this month said it is acquiring AirAsia’s local venture and merging it with Air India Express into a single low-cost carrier. This consolidation will likely happen by the end of 2023.

Air India is gearing up for a revamp under its new owner, Tata. The full-service carrier is considering ordering as many as 300 narrow-body jets, a transaction that would be one of the largest orders ever in commercial aviation history.

Air India chief executive Campbell Wilson last month said the airline will triple its fleet of 113 aircraft over five years, with a “significant” increase in both narrow- and wide-body aircraft.

Air India is also in discussions to raise at least US$1 billion in a funding round that could value the carrier at around US$5 billion, people familiar with the matter said in late September. The airline is planning to add 25 Airbus and five Boeing aircraft from lessors, starting in December. BLOOMBERG

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