Tatas, SIA pumped Rs 650 crore into Vistara ahead of announcing merger

The airline, a 51:49 joint venture of the Tatas and Singapore Airlines, has seen infusion of at least Rs 9,900 crore as equity after its birth in 2015

The Tata group and Singapore Airlines (SIA) last month cumulatively infused Rs 650 crore into Vistara as equity investment to meet its working capital requirements.

Vistara — a 51:49 joint venture of the Tata group and SIA — has seen infusion of at least Rs 9,900 crore as equity investments after its inception in 2015, according to documents reviewed by Business Standard.

The latest investment was done on November 16, just 13 days before the Tata group announced Vistara’s merger into Air India. The merger is expected to be over by March 2024 and SIA will hold a 25.1 per cent share in the merged entity.

The Tata group infused Rs 331.5 crore and SIA infused Rs 318.5 crore in Vistara as equity investments, according to documents. This means that the Tata group and Singapore Airlines have put at least Rs 5,049 crore and Rs 4,851 crore, respectively, in Vistara since its inception.

The net loss of Vistara — which has been in the red since its inception — rose 35 per cent to Rs 2,031 crore in FY22.

“Vistara has not reached profitability as it has not reached a scale where there are cost and network efficiencies,” a Singapore Airlines spokesperson said in response to Business Standard’s questions.

Vistara and Air India are currently operating 1,909 and 2,662 flights per week, respectively, according to aviation analytics company Cirium. IndiGo — which has about 55 per cent share of the domestic passenger market — is currently operating approximately 11,493 flights per week.

The SIA spokesperson did not reveal how much money it — along with the Tata group — is planning to infuse into Vistara until its merger into Air India is complete.

Following Vistara’s merger, Air India will be able to achieve “scale synergies and seamless cooperation” on both domestic and international routes, as well as optimise its route

network and resource utilisation, the spokesperson noted.

“It will also be able to tap into the resulting larger consumer base, and offer a larger network to strengthen its loyalty programme. With scale and an expanded network both domestically and internationally, coupled with a strong brand name, the enlarged Air India is well-positioned to capture leading market share in India,” the spokesperson mentioned.

The Tata group did not respond to Business Standard’s questions.

A Vistara spokesperson said: “As a matter of policy, we do not comment on the financial information of the company.”

At an extraordinary general meeting on February 4 this year, Vistara explained the reasons for its continued losses. “The company commenced its operations on January 9, 2015. It is still a short span for a start-up to generate profits given that the company is operating in a highly competitive environment and also considering the significant adverse impact of Covid-19 on travel demand, the company’s profits are expected to be inadequate during this period,” Vistara had stated.