Three reasons why Tata may buy Air India stake with Singapore Airlines
Ratan Tata and Tata Sons boss N. Chandrasekaran said to have discussed their interest in Air India with government officialsbusiness Updated: Jun 22, 2017 16:14 IST
The Tata Group is considering buying a stake in Air India in partnership with Singapore Airlines Ltd, decades after the national carrier founded by them was nationalised.
“It’s a possibility,” a person said, requesting anonymity. “You sign the cheque and from the very next day imagine the clout you have in the subcontinent, deep into Europe and the US.”
Air India was launched in 1932 by J.R.D. Tata as Tata Airlines. Its name was changed to the current one in 1946. The government decided to take it over in 1953. So, the Tata Group’s passion in aviation has always been there.
Second, the Tata group and Singapore Airlines launched Vistara in 2015 and it will start plying international routes next year. Vistara is on the lookout for bigger planes to fly international next year. Air India has enough (its fleet strength is 118). Vistara has still not announced its proposed wide body fleet order.
Third, Air India will provide an unmatched network depth to Singapore Airlines, which itself is under pressure from rivals such as Thai Airways, Cathay Pacific and Emirates.
“Singapore Airlines will become a very strong carrier if this happens,” a person, requesting anonymity said, adding that the Tata group would probably want a majority stake, a write-off of the airline’s accumulated losses and a reduction in the airline’s considerable debt of around Rs 50,000 crore.
In 2000, the Tata group and Singapore Airlines had expressed their interest in acquiring up to 40% of Air India. In 2013, after a meeting with the then aviation minister, Ratan Tata said the Tata group would be interested in buying a stake in Air India if the government were to privatize the airline.
(With inputs from Mint)