(Photo : BT Creative)

• Singapore Airlines (SIA) is set to invest Rs 3,194.5 crore in Air India, following the anticipated merger with Vistara.
• The merger, expected to complete by November 2024, will see SIA owning a 25.1% stake in the enlarged Air India.
• SIA's investment is part of a strategic move to strengthen its foundations, including a S$1.1 billion A350-900 retrofit programme.
• The merger will enhance SIA's multi-hub strategy, allowing it to participate directly in India's large and fast-growing aviation market.

Singapore Airlines (SIA) is on the brink of making a substantial investment of Rs 3,194.5 crore in Air India. This move comes in the wake of the anticipated merger of Vistara, a joint venture between Tata Group and Singapore Airlines, with the Tata Group-owned Air India. Vistara, established in 2015, has been a successful venture with Singapore Airlines holding a 49% stake and the Tata Group owning the majority 51% share. The merger, slated for completion by November 2024, will see SIA's additional investment in Air India amounting to Rs 31,94.5 crore.

SIA's Strategic Move and Anticipated Gains

Singapore Airlines has stated that further capital injections into Air India will be considered after a thorough evaluation of the airline's funding demands and the financial options available. This strategic move is part of the group's initiative to strengthen its foundations, which also includes a S$1.1 billion A350-900 retrofit programme. The merger between Air India and Vistara is a significant step for SIA. The consideration for SIA comprises its 49% interest in Vistara and INR 20,58.5 crore in cash, equivalent to S$318 million. This will be exchanged for a 25.1% equity interest in the enlarged Air India. Upon completion of the transaction, the group expects to recognise a non-cash accounting gain of approximately S$1.1 billion.

Merger Details and Future Prospects

Simultaneously, SIA will start equity accounting for its share of Air India's financial results. The merger, announced by SIA and Tata Sons in November 2022, includes an agreement for SIA to contribute its share of any funding previously provided by Tata prior to the completion of the merger, together with relevant funding costs, up to INR 5,020 crore. This move will allow SIA to maintain a 25.1% stake in Air India. The merger, announced on 29 November 2022, is scheduled to be completed on 11 November 2024. Once the merger is complete, Singapore Airlines will own a 25.1% stake in the combined entity. The merged entity will have a significant presence across all key Indian air travel segments, including domestic, international, full-service, and low-cost operations. This will strengthen SIA's multi-hub strategy, allowing it to continue participating directly in India's large and fast-growing aviation market.