Tata Sons may merge AirAsia India and Vistara: report
14 January 2021
Tata Sons is reported to be planning conslidation of its aviation business comprising the two joint ventures of Air Asia and Vistara as the group eyes a buy-out of government’s stake in national carrier Air India.
Tata Sons is also reported to be setting up a strategy team headed by group chief financial officer Saurabh Agrawal to explore various possible solutions such as mergers and on rebranding its airline ventures, reports citing sources close to the development said.
Tata Group has already raised its stake in Air Asia India, a joint venture with Malaysia’s Air Asia Berhad, to 84 per cent and is expected to buy out the partner in the airline. It is likely that once Tatas manage to acquire Air India, the new venture may combine into Air India, which will then partner Singapore International Airlines (SIA) in Vistara.
Any decision on rebranding will depend on whether AirAsia continues as a minority investor, reports citing sources said.
AirAsia Group said in a stock market filing its wholly-owned subsidiary AirAsia Investment Limited (AAIL) will retain a minority stake of 16.33 per cent in AirAsia India.
Another report citing AirAsia Group president (Airlines) Bo Lingam said, "AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI. This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in ASEAN while continuing our market dominance for travel from ASEAN to India and North Asia.”
“India will remain an important market for AirAsia. Tata Sons has been an excellent partner and we look forward to continuing working closely together in other areas of growth." Lingam said, adding that the partial divestment from its non-core Indian unit will allow the group to focus on "core markets in ASEAN, particularly in Malaysia, Thailand, Indonesia, and the Philippines.
The deal with Air Asia is yet to be closed and it is not known whether Tatas will opt for a full buyout of its partner in Air Asia India. A decision on Tata’s acquiring 100 per cent stake in Air Asia India is expected to be taken by the end of March, say reports.
However, a merger of Vistara with the bought-out Air Asia would require SIA’s consent. It is also unlikely that anyone who acquires Air India will opt to abandon its brand value.
A decision on the combination would also depend on a host of factors, including, business environment, changes in global lockdown restrictions, growth in travel and availability of aircraft.