NEW DELHI: Amid strong rumours for a long time, Singapore Airlines (SIA) on Thursday confirmed that it is in “confidential discussions” with the Tata Group to explore a possible merger of Vistara and Air India. “In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India Ltd, a subsidiary of Tata (the ‘potential transaction’).
The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India,” SIA said in a regulatory filing to the Singapore Stock Exchange.
Singapore Airlines holds a 49% stake in the full-service-carrier Vistara. Tata group owns 51% stake in Vistara and is also the owner of Air India and Air India Express.
The group also has 83.67% shareholding in AirAsia India and is open to buy the remaining stake. After taking over Air India from the Government of India earlier this year, the salt-to-steel conglomerate is said to be working to increase synergy between its different airlines.
In late April this year, it had already proposed to acquire the no-frills carrier AirAsia India for which it has received approval from the Competition Commission of India (CCI). According to sources, Tata Group has plans to bring all of the group’s airlines businesses under the Air India umbrella by 2024.
Last month, Air India had said that it aims to increase its market share to at least 30% in the domestic market and significantly grow in the international routes from the present market share over the next 5 years under its comprehensive transformation plan titled “Vihaan.AI”.
According to DGCA data, Air India’s market share stood at 8.4% in July 2022, which is nowhere near that of the country’s biggest airline IndiGo (58.8%). The combined market share of all Tata Group-operated airlines (Air India, Vistara (10.4%) and AirAsia India (4.6%) stood at 23.4 % in July.
Indigo forex loss, fuel cost to remain high in Q2
Adverse currency movement (Indian rupee Vs US dollar) is likely to result in a Rs 1,100 crore forex loss for Indigo in Q2FY23 and average air turbine fuel (ATF) prices are up 6% quarter-on-quarter to `1,30,200 per kilolitre, resulting in fuel expense of Rs 6,300 crore, said analysts at ICICI Securities in a note. It added that fares are expected to remain strong but the surprise on either side is often possible. “Considering passenger load factors (PLFs) remain below 80%, it is evident that airlines are not chasing load factors by sacrificing fares. However, traditionally, Q2 fares are lower than Q1. We factor flattish fares sequentially in Q2FY23.” The brokerage expects broadly flattish operational parameters for India’s largest carrier IndiGo QoQ in Q2FY23. ICICI Securities expects IndiGo to report a loss of Rs 1,500 crores in Q2FY23, while it would be a loss of `400 crore adjusted for forex.