Vistara raises $110 million through ECBs

Forum Gandhi Mumbai | Updated on July 02, 2021

Earlier this year, its promoters Tata Sons and Singapore Airlines had infused an additional ₹465 crore

Tata SIA Airlines Limited, the owner of Vistara airlines, has raised $110 million through External Commercial Borrowing (ECB) in May, according to data on the Reserve Bank of India’s website.

In response to BusinessLine’s query, Vistara said that as per its policy, it does not comment on such matters.

Earlier this year, its promoters Tata Sons Ltd and Singapore Airlines Ltd had infused an additional ₹465 crore into the airline, data accessed by the business intelligence platform, Tofler showed.

So far, the two joint venture promoters of Vistara have infused around ₹4,500 crore in the airline and analysts said that the latest round of funding will make it battle-ready for medium-haul and long-haul operations.

Loss widens

Vistara, like all other Indian carriers, has been struggling as air travel has been hit for over a year now. Even prior to that, Vistara’s loss had widened to ₹1,814 crore in FY20, against ₹831 crore in FY19. This was mainly due to higher operating costs.

Despite this, the airline continues to expand. The full-service carrier aims to have 70 aircraft fleet by 2023. Currently, its fleet include 36 Airbus A320s, two A321 neos, six Boeing B737-800NGs, and two B787-9 Dreamliners.

Aviation consultancy firm Capa India has forecasted that Indian airlines are likely to register a consolidated loss of about $4.1 billion in FY2022. This will take the combined losses for FY21 and FY22 to about $8 billion.

Need for funding

To stay afloat, CAPA had said that an estimated $4.5-5.0 billion of funding will be required to overcome this crisis, mostly for airlines.

Earlier this week, SpiceJet had said that it plans to raise close to ₹2,500 crore. In May, the board of directors of InterGlobe Aviation Limited, approved raising up to ₹3,000 crore through a qualified institutional placement (QIP) process.

Go First, formerly known as GoAir, too, plans to raise up to ₹3,600 crore through an initial public offering before the end of the year. It has filed a Draft Red Herring Prospectus (DRHP) with the Securities Exchange Board of India (SEBI) in May.

Meanwhile, in an effort to offer relief to the aviation sector, the government has extended the Emergency Credit Line Guarantee Scheme (ECLGS) to airlines.

Published on July 01, 2021

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