Singapore Airlines, Tata Group in talks over integration of Vistara and Air India

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Singapore Airlines Ltd said on Thursday it was in confidential discussions with India’s Tata Group regarding a potential deal which may involve the integration of Vistara and Air India.

"The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India," Singapore Airlines said in a statement.

However, it added the discussions were ongoing and no definitive terms were agreed upon yet. Singapore Airlines owns a 49% stake in Tata SIA Airlines, which operates Vistara, while the remaining 51% is owned by the Indian conglomerate.

Air India did not immediately respond to any request for comments.

The Tata Group plans of a merger to consolidate the business have made SIA look at the enterprise in a new light to see how the changes affect its original plan.

As it stands, the Tata Group owns 100 percent of Air India and its low-cost subsidiary Air India Express. It owns a 51 percent share in Vistara, with the other 49 percent lying with SIA. In AirAsia India, the conglomerate has an 83.67 percent stake, and it plans to acquire the remaining 16.33 percent from Malaysia-based AirAsia to merge it with Air India Express.

Singapore Airlines had asked the Tatas to wait for some time before taking any decisions about the merger. Both the Tatas and SIA have discussed such possibilities, and SIA had reportedly even agreed to join the Tata bid for Air India but, because of the pandemic, decided to back out.

While the Tata group and Singapore Airlines have both said that Vistara and Air India will continue to operate separately, reports indicate that all the airlines will be housed under one roof in Gurugram. So, while Vistara might continue as is for a while, there will still be synergy among the various carriers.

As part of the plan being discussed at multiple levels within the group, the consolidation process is likely to start with the merger of AirAsia India into Air India Express, and will be completed over the next 12 months.

Following the merger of AirAsia India and Air India Express, the Tata Group will look to merge Vistara into Air India and Singapore Airlines, which owns part of Vistara will, get a stake in the merged entity.

Reports have suggested that the Tata Group has set a completion date of 2024 for the merger of its airline companies under a single brand.

Air India as part of its five year plan also announced that it aims to control around 30 percent market share in India by 2027, which is likely only possible following a merger of all Tata Group Airlines.

Air India is also expected to order as many as 300 narrowbody jets. The carrier may order Airbus SE’s A320neo family jets or Boeing Co.’s 737 Max models, or a mix of both, the people said, asking not to be identified because the discussions are confidential. A deal for 300 737 Max-10 jets could be worth $40.5 billion at sticker prices, although discounts are common in such large purchases.