Tata Sons has initiated the consolidation process of all its airlines under the Air India brand, The Economic Times (ET) reported. The company's consolidated fleet with Vistara, AirAsia India, and Air India Express will increase Air India’s fleet capacity to 233 aircraft, making it the second largest in the country.
Accoding to the ET report, Tata Sons is in a discussion with Singapore Airlines (SIA) for the merger. Singapore Airlines is Tata Sons’ joint venture partner in Vistara. The report added that the Vistara brand may be dropped after the merger, citing an executive who has knowledge of the matter.
After the merger, SIA will be a minority shareholder in Air India with 20-25 per cent stacks. A few board members of Vistara will also be included in the Air India board. The merger process might take a year to complete. An official announcement is expected within a week.
The merger’s outline has been finalised by Tata Group and Air India Chairman N Chandrasekaran, and SIA, and Air Aisa top executives, the report said. It is expected to happen within a month of the Tata group completing the consolidation of Air India Express and AirAsia India. Tata Sons holds the majority 51 per cent stake in Vistara airlines.
"SIA has reaped benefits from Vistara and realises that the cost of scaling up Vistara will be significantly higher as compared to Air India, which already has a significant size," an executive told ET. The report said that the merger will also give Air India more bargaining power in its dealings with original equipment manufacturers such as aircraft and engine makers.
Tata Group took over Air India from the government after winning the bid in January this year. The company offered a bid of Rs 18,000 crore. This was comprised of a cash payment of Rs 2,700 crore and absorbing the carrier’s debt worth Rs 15,300 crore.