Saturday, February 08, 2020

Tata mulls AirAsia India, Air India Express merger - report

Tata Sons may partner Singapore Airlines in bidding for Air India, amid hopes it will merge its AirAsia India subsidiary with the flag carrier's low-cost unit Air India Express, local media reported on February 4.

The Indian conglomerate already operates Vistara (UK, Delhi Int'l) as a 51/49 venture with Singapore Airlines. A combination of Air India and Vistara would give Tata Sons a monopoly in the country's full-service market. The two partners have started working on a possible structure for such an acquisition, according to the reports.

Tata also holds 51% of AirAsia India. It has approached Tony Fernandes of AirAsia Group, which holds the remaining 49% of AirAsia India, to gain his approval to acquire Air India Express, sources told the Times of India. This is because the two companies' shareholders’ agreement stipulates that Tata cannot invest more than 10% in another budget carrier without Fernandes' approval.

“The merger would give Fernandes a bigger play in Indian aviation, so it’s a win-win for both partners,” a source said.

A Tata-Singapore Airlines bid would be based on the understanding that the low-cost business would be run by Tata and Fernandes, another unnamed source told the Times of India, while the arrangement with SIA would only be for the full-service carrier.

Tata Sons board member Natarajan Chandrasekaran recently told the newspaper that the group “will not run a third airline unless we merge”. However, on February 5, he told the Press Trust of India that it was still "too early" to make a decision about any kind of bid for Air India.
07/02/20 ch-aviation

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