For a Rs 20 Billion More.
Amid firming of its control in AirAsia India and M&A talks with Jet Airways, Tata Sons and Singapore Airlines have pumped Rs 20 billion into Vistara as the airline lays its expansion plans.
This is the biggest single dose of equity infusion into the joint venture (JV) since its inception in January 2015. It will help Vistara finance its $3.1 billion (around Rs 220 billion) aircraft order.
The airline’s board passed a resolution for issuing capital in August. Fresh shares were issued to the two promoters earlier this month. A filing dated 13 October with India’s corporate affairs ministry shows that Tata made a Rs 10.2 billion contribution to the carrier through subscribing to a new share issue, while SIA providing the remaining Rs 9.8 blllion
The investment signals the Tata group’s ambition to propel its aviation business forward more dynamically at a time when its nearest competing full service carrier – Jet Airways – is struggling to survive. (see : Jet)
“Vistara will use these aircraft to make its domestic network denser and to support its international operations planned for later this year,” it had said in July.
After this equity injection, it is estimated that the two shareholders have now invested Rs 38 billion into the joint venture. The additional funds are expected to go towards the carrier’s fleet expansion. It has earlier planned to lease 37 Airbus A320neo family aircraft that would be delivered between 2019 and 2020. In July it also signed letters of intent to order 13 A320neos and six Boeing 787-9s.
The capital boost, which was approved by the airline’s board in September, maintains Tata’s holding in Vistara at 51%, with SIA holding the balance.