Friday, January 27, 2023

Tata Group May Invest $1.5-1.8 Billion In Proposed Airline To Be Created By Air India-Vistara Merger

It's been nearly two months since it was confirmed that Vistara and Air India would be merged by March 2024. And now, it’s been revealed that Tata Group’s parent company, Tata Sons, may invest $1.5–1.8 billion in the proposed airline to be created after the merger of Air India and Vistara.  

The investments will be made from the proceeds received as dividend income from Tata Consultancy Services (TCS) and other firms in the group.

"The board (of Tata Sons) has to decide on the exact amount to be invested in Air India-Vistara, among other initiatives by Tata group. A significant portion could be set aside for investment into Air India-Vistara combined," a person aware of the matter said, as per the Mint report.

The money will be used primarily to expand the fleet, raise the airline's market share beyond 30 percent, improve customer service, and increase global slot facilities. The infusion may start in the first quarter of 2023–24 (FY24), i.e., the April–June quarter of 2023.

About 80% of Tata Sons' dividend income comes from TCS. The report added that the capital being considered to be infused into the entity is equivalent to 50–60% of the dividend income received from TCS in FY23.

Tata Sons holds over 264 crore shares in TCS, leading to a total dividend income of Rs 19,832 crore in the third quarter of FY23, as per the BQPrime report.

In November last year, Singapore Airlines and Tata Sons announced the merger of Air India and Vistara. Singapore Airlines will hold 25.1% of the merged entity.

Vistara earned a profit for the first time in a quarter (the October-December 2022 quarter) since beginning operations in January 2015.

27/01/23 Vanya Gautam/India Times

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