Is consolidation on the cards for Air India

Is Air India preparing for an overhaul and possible consolidation under Tata? Will all existing brands like Vistara (TATA: SIA JV), Air Asia, Air India Express and Air India operate as a single entity?

Although there is no official confirmation, snippets of news from Air India have led to strong speculation in the market regarding a unified Air India brand under the Tata Group rather than separate entities with separate various participations of the Tata group.

Tata owns four airline brands – Air India and another full-service carrier Vistara, as well as low-cost carriers Air India Express and AirAsia India. Earlier this month, Air India announced that it was buying the local AirAsia business and merging it with Air India Express into a single low-cost carrier. This consolidation will likely take place by the end of 2023.

This has spurred market speculation that Tata Group is considering a plan to integrate its four airline brands under Air India.

An October 13 exchange filing said the talks “aim to deepen the existing partnership between SIA and Tata, and could include a potential integration of Vistara and Air India.”

Market buzz is also ripe with speculation that Air India is preparing to order up to 300 narrow-body jets, a deal that would be one of the biggest orders in commercial aviation history. Air India Chief Executive Campbell Wilson said last month the airline would triple its fleet of 113 planes over five years, with a “significant” increase in narrowbody and widebody planes.

Air India is also in talks to raise at least $1 billion in a funding round that could value the carrier at around $5 billion, other people familiar with the matter said in late September. The airline plans to add 25 Airbus SEs and five Boeing Co. planes from lessors from December.

Tata was selected as the winning bidder for Air India in October last year after beating rival suitors with a $2.4 billion bid. The deal marked the country’s highest-profile privatization under Prime Minister Narendra Modi, ending decades of attempts to offload the loss-making and indebted carrier that has survived thanks to years of taxpayer bailouts.

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