Tuesday, October 11, 2022

Singapore Airlines Could Have Stake Dilution Following Air India-Vistara Merger

Among the many things for the Tatas Group to consider while consolidating its airline business is managing the existing shareholding structure of its carriers. And discussions with Singapore Airlines are likely to feature significantly in the coming few months. SIA owns a significant portion of the full-service carrier Vistara, which is reportedly in the process of seeing its business merge with Air India (AI).

India’s full-service airline Vistara is a joint venture between the Tata Group and Singapore Airlines (SIA). SIA partnered with the Tata Group years before the Air India deal took shape, to tap the promising domestic market in India, and owns 49% of Vistara.

But Tatas’ 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.

Earlier this year, 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.

Now, unless SIA puts more money into the enterprise, its share in the combined AI-Vistara entity is likely to fall significantly. A person aware of the matter told The Times of India (TOI), “It all depends on how much SIA would like to hold in the merged entity and will be based on the combined enterprise valuation.”

The report notes that under the existing rules, another airline could have a stake in Air India as long as the Tatas continue to hold at least a 51% share.

11/10/22 Gaurav Joshi/Simple Flying

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