Friday, January 08, 2021

Tata Sons may merge AirAsia India and Vistara - report

A merger between AirAsia India and Vistara is one of the options their conglomerate parent Tata Sons is considering, having set up a strategy team headed by group chief financial officer Saurabh Agrawal to explore various possible solutions such as mergers and rebranding its airline ventures, two sources told the Hindustan Times and its financial offshoot Mint on condition of anonymity.

Tata, which is among those that have expressed an interest to acquire flag carrier Air India , revealed its intention in December to raise its stake in AirAsia India from 51% to 84% by buying part of the stake held by its Malaysian partner AirAsia Group.

As previously reported, before the end of 2020 it duly moved to increase its holding to 83.67% for a total consideration of USD37.66 million. This deal has not yet closed, however. Under the share-purchase pact with AirAsia, Tata has the option of raising its stake in AirAsia India to 100%, but this may not happen if Tata opts not to close the deal on the additional 32.67% by the end of March.

A decision on the low-cost carrier’s fate is expected to be taken by the end of March, the sources said, by which time more clarity is hoped for on Tata’s bid for Air India.

“A final decision in this regard depends on whether AirAsia continues as a minority investor,” one source said. “In the event of AirAsia continuing its investment, Tata Sons may not be required to pay a royalty for the use of the brand name, which is a key factor.”

Tata also owns 51% of full-service airline Vistara, with the rest held by Singapore Airlines. A potential merger of the two carriers under the Vistara brand would need consent from Singapore.

“A merger with Vistara depends on many factors, including improvement in load factor, cash flows, vaccinations, global lockdowns and travel restrictions, the proposed deal with Air India, the consent of Singapore Airlines, the completion of pending aircraft orders, and competition from other airlines in India,” a source said. “If all this works, several sectors will open up for flights, improving prospects for AirAsia India.”

08/01/21 ch-aviation

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