Two weeks ahead of announcing it was swapping its 49% stake in Vistara (UK, Delhi International) for a 25.1% stake in Air India (AI, Delhi International), Singapore Airlines (SQ, Singapore Changi) provided funding of INR3.2 billion rupees (USD38.4 million) to the chronically loss-making Vistara. The sum was part of a INR6.5 billion (USD78.4) capital top-up provided to the airline by its two owners, Singapore Airlines and Air India.
India's Business Standard newspaper reports that cash was simply one funding parcel among many the two airlines have provided Vistara since founding it in 2016. While considered India's best airline from a passenger viewpoint, Vistara has never made a profit. Reportedly, Air India, which owns the majority 51% stake, has directed INR49.6 billion (USD600 million) to Vistara since 2016 and Singapore Airlines has contributed INR48.4 billion (USD585 million) for a total of INR98 billion (USD1.185 billion).
In early 2022, Tata Sons acquired Air India and its Vistara shareholding in addition to low-cost subsidiary Air India Express (IX, Delhi International) and a majority stake (since increased to a 100% stake) in AirAsia India (Bengaluru International). Tata Sons set about overhauling the airline group, which included Air India and Vistara, and Air India Express and AirAsia India merger announcements. The most recent Vistara capital top-up occurred on November 13, 2022, 13 days ahead of the November 29 announcement of the Singapore Airlines' equity swap.
Notwithstanding the impact of Covid-19, Singapore Airlines has previously said Vistara was consistently unprofitable because it never achieved the required cost and network efficiencies. Among others, that is one hurdle the merger with Air India is designed to overcome. Tata Sons aims to complete the merger by the end of 1Q 2023.
