Tata Sons and Singapore Airlines have together infused Rs 500 crore in airline Vistara, a regulatory filing accessed by The Indian Express showed. The two companies, that own Vistara in a 51:49 joint venture, infused the total amount in the same proportion.
The fund infusion happened through a rights issue, and the shares to the joint owners were allotted on February 14, less than a month after the Tata group took over 100 per cent of Air India from the Central government.
Responding to an e-mail query by The Indian Express, a Vistara spokesperson said: “As a matter of policy, we do not comment on the financial information of the company.”
In addition to Air India, its low-cost subsidiary Air India Express and Vistara, the Tata group also has AirAsia India in its airlines portfolio.
The latest infusion is the sixth round of funding in Vistara since April 2020. While the Tata group infused Rs 255 crore in the loss-making airline, Singapore Airlines infused Rs 245 crore, the filing with Ministry of Corporate Affairs showed. The promoters were together allotted 50 crore shares against the fund infusion.
The full-service carrier, which had 7.5 per cent market share in the domestic air passenger market in January, last received an equity infusion from Tata Sons and Singapore Airlines in August 2021 worth Rs 750 crore.
Prior to that, it received Rs 465 crore from the joint owners in May last year.
Vistara has come under criticism for poor service quality over the last few quarters and its newly-appointed CEO Vinod Kannan on February 16 wrote a letter to customers admitting that the airline “fell short” and “did not live up” to the customers’ expectations.
An employee of Singapore Airlines on deputation to Vistara, Kannan took charge as CEO on January 1.
For 2020-21 (April-March), Vistara reported a loss of Rs 1,611.57 crore, compared to Rs 1,813.39 crore a year ago. Its topline also significantly contracted to Rs 2,243.49 crore during FY21, from Rs 4,738.46 crore in FY20. The fall in revenues is in line with the impact of Covid-19 pandemic on the global aviation industry.
Currently, the airline industry is reeling under pressure from increasing jet fuel costs that have grown nearly 1.6 times in the last one year. Aviation turbine fuel comprises more than half the cost for airlines. The fund infusion from its promoters could help Vistara through the competitive summer vacations season.
In the Summer Schedule 2022, effective from March 27 till October 29, Vistara will operate 1,741 domestic departures every week in India. Market leader IndiGo will operate 11,130 departures per week. In the Winter Schedule 2021, Vistara was scheduled to operate 1,675 flights per week.