Merger into Air India likely by mid 2025, says Vistara CEO Kannan

Vistara is anticipating an operational merger with Air India by mid-2025, in addition to its expectations of receiving legal approvals for the same by the middle of the ongoing calendar year, the full-service carrier’s Chief Executive Officer Vinod Kannan said at a press briefing.

“We believe all the approvals from a legal perspective should come through sometime in the first half of this year. From an operational perspective, we are working with authorities to see how we can operationalise this (merger). The airline is looking at this year or early next year as the operational merger, or it could stretch through the middle of next year,” Kannan said.

The airline expects to receive regulatory clearances, which include those from the National Company Law Tribunal (NCLT), Ministry of Civil Aviation (MoCA), and Department for Promotion of Industry and Internal Trade (DPIIT) by mid-2024. The Competition Commission of India (CCI) approved the merger between the airlines in September 2023, allowing the Tata Group to form a single, full-service carrier.

Meanwhile, Kannan emphasised that the airline is cash flow positive and will not require any capital infusion from its stakeholders in the near future.

“We don’t think there is a need for any additional injection from the shareholders. We’ve been able to manage through our own cash flow while funding aircraft deliveries, and growth,” he added.

In November 2022, the airline raised Rs 650 crore from its shareholders, namely the Tata Group and Singapore Airlines (SIA), for its working capital requirements. This implies that 2023 was the first year the airline did not raise any money from its parent companies.

Since its inception in 2015, Vistara, a 51:49 joint venture of the Tata Group and SIA, has seen an infusion of Rs 9,900 crore.

That said, Kannan does not expect airfares to taper down during February and March, which are considered weaker months in terms of air ticket pricing. He reasons that supply chain and capacity issues in the industry may restrict prices from falling in the aforementioned months.

“If you look at the trend of pricing, the fares usually drop in February and March, but complications this year include supply chain issues as some aircraft of other airlines are grounded. Airfares are also a function of how much capacity there is in the market,” he explained.

The airline expects to add three more aircraft to its fleet by April this year, increasing its fleet size to 70 from the current 67.

The airline also plans to introduce virtual and augmented reality technologies for certain staff training activities, including pilots.

First Published: Jan 08 2024 | 6:51 PM IST