As made public by the Competition Commission of India, on Friday, 1st September 2023, the Competition Commission of India (CCI) announced that they had given their approval in the case of the merger plans; making the combination and creation of a leading airline group imminent.
The formal decision to merge the two airlines Air India and Vistara was made in November of last year, as Singapore Airlines and the Tata Group decided to go forward with the merger plans, which were subject to approval at the time.
The latest advice from the CCI updates this, giving approval for the Group to proceed with plans.
Inside the document issued by the Competition Commission of India, it is known that Vistara will be the disappearing part in this merger, since the airline will be transferred into Air India, which acts as the surviving part in this merger.
Vistara is currently a joint venture between Tata Sons Private Limited and Singapore Airlines, which hold 51% and 49% of shares in the company respectively, however it is presently unknown if, and in that case what stakes the companies will hold post-merger.
In November 2022, it was reported by AviationSource that Singapore Airlines (SIA) and India’s Tata Sons had formally agreed to merge Air India and Vistara, creating the nation’s leading airline group.
As part of the merger arrangement, SIA was also reported to invest INR 20,585 million (US$250 million) in Air India, thus giving SIA a 25.1% stake holding in the enlarged Air India conglomerate.
The investment will also position Singapore Airlines with a significant presence across all key market segments. The proposal is for the two partners, SIA and Tata Sons, to complete the airline merger by March 2024 with this finalisation subject to regulatory approvals being granted.
Singapore Airlines have stated that they intend to finance the investment by full funding with internal cash resources. These were reported as S$17.5 billion as at 30 September 2022.
Both the partners have given an undertaking to participate in additional capital fund injections, if required, so as to support the growth and operations of the enlarged Air India conglomerate through financial years FY2022/23 and FY 2023/24.
Based on SIA’s initial stake holding of 25.1%, its share of any additional cash injection will be up to INR 50,200 million (S$880 million, or US$615 million), which would be payable only after completion of the merger.
