Tata Sons, Singapore Airlines invest ₹465 crore in Vistara

Forum Gandhi Mumbai | Updated on May 13, 2021

The funding has been made into Tata Sia Airlines Limited, the operating company of Vistara

Tata Sons and Singapore Airlines have invested ₹465 crore in their Indian joint venture airline Vistara.

According to financial data accessed by the business intelligence platform, Tofler, the investments have been made against 46.5 crore new shares in the airline. While Tata Sons has pumped in ₹237 crore for 23.7 crore shares, Singapore Airlines has invested ₹228 crore.

The funding has been made into Tata Sia Airlines Limited, the operating company of Vistara.

The fresh equity infusion comes at a time when the aviation industry is struggling to stay afloat due to the travel restrictions across the country. Additionally, according to India Ratings, 2021 has brought to the fore three new challenges to contend with — higher fuel expenses, rising competition and the flight for market share.

Globally, crude prices have shot up amid soaring global demand. The ATF prices in April 2021 were higher by 59.8 per cent on a year-on-year basis, and in May 2021, prices have been substantially higher by 103.4 per cent on a y-o-y basis, ICRA said.

Consequently, every $1 per bbl increase in crude price would hurt the industry operating profit by 6-7 per cent, explained Ambit Capital’s Varun Ginodia. India Ratings and Research has said that the recovery in domestic and international travel has been delayed by three and six months, respectively.

A review of Vistara’s financials over the past five years by BusinessLine shows that the company’s losses have zoomed to ₹1,813.38 crore in FY20 compared to ₹400.90 crore in FY16. Its revenue from operations increased by 585.37 per cent by the end of FY20. However, expenses, too, shot up by 497.46 per cent between FY16 and FY20.

Looking ahead to 2021, Ambit Capital has forecast that the fare war will pan out once the regulators remove the fare regulations. This, along with pressure from lessors/vendors to clear their dues, will lay the ground for sector consolidation over the next six months in the sector.

Published on May 13, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor