Is Consolidation On Cards For Air India?

Is Air India gearing up for a revamp and a possible consolidation under Tata? Will all existing brands like Vistara (TATA: SIA JV), Air Asia, Air India Express and Air India will operate as one entity?

While there is no official confirmation, bits and pieces of news coming out from the Air India has led to strong market speculation about one unified Air India brand under the Tata Group rather than separate entities with varied holdings of the Tata group.

Tata has four airline brands -- Air India and other full-service carrier Vistara, along with budget carriers Air India Express and AirAsia India. Air India earlier this month said it is acquiring AirAsia's local venture and merging it with Air India Express into a single low-cost carrier. That consolidation will likely happen by the end of 2023.

This has boosted 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 "seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India."

Market buzz is also ripe with speculation that Air India is gearing up to order as many as 300 narrow-body jets, a transaction that would be one of the largest orders ever in commercial aviation history. Air India Chief Executive Campbell Wilson last month said the airline will triple its fleet of 113 aircraft over five years, with a "significant" increase in both narrow and wide-body aircraft.

Air India is also in discussions 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 is planning to add 25 Airbus SE and five Boeing Co. aircraft from lessors, starting in December.

Tata was selected as the winning bidder for Air India in October last year after beating rival suitors with a $2.4 billion offer. The transaction marked the country's most high-profile privatization under Prime Minister Narendra Modi, ending decades of attempts to offload the money-losing, debt-laden carrier that survived on years of taxpayer bailouts.