Singapore Airlines on Thursday said it is in "confidential discussions" with Tata group to explore possible merger of Vistara and Air India.
This is the first time that Singapore Airlines (SIA), which holds 49 per cent stake in Vistara, has officially acknowledged that it is in talks with Tata group on the possibility of merging the two airlines.
Tata group owns 51 per cent stake in Vistara and is also the owner of Air India and Air India Express. The group also has 83.67 per cent shareholding in domestic carrier AirAsia India.
In line with its multi-hub strategy, SIA is currently in confidential discussions with Tata to explore a potential transaction in relation to the securities of Vistara and Air India, according to a regulatory filing.
"The discussions seek to deepen the existing partnership between SIA and Tata, and may include a potential integration of Vistara and Air India," SIA said in the filing to the Singapore Stock Exchange.
According to the filing, the discussions are on-going and no definitive terms have been agreed upon between the parties.
"There is no certainty or assurance whatsoever that (a) any definitive agreement will be entered into or (b) the potential transaction will materialise or proceed to completion arising from these discussions.
"Even if a transaction were to materialise, it would be subject to the relevant regulatory approvals, amongst other matters," it said.
The filing also said the establishment of Vistara in 2013 gave SIA Group a stake in India's fast-growing aviation sector. India has strong domestic and international traffic flows, which is expected to more than double over the next 10 years.
"This is an integral part of the SIA Group's multi-hub strategy, allowing it to get access to important sources that complement its strong Singapore hub," it said.
Vistara started operations in January 2015.
SIA said that it will make the necessary announcements as appropriate or when there are any material developments regarding the potential transaction in compliance with the relevant provisions of the listing manual of the Singapore Exchange Securities Trading Limited.
In September, PTI reported that Tata group has started an exercise to evaluate options to consolidate AirAsia India and Vistara under Air India to bring operational synergies among the three airlines under its umbrella.
Tata group, which took over the control of Air India in January this year, has also set up a team that is evaluating synergies in operations between Air India Express and AirAsia India as well as between Air India and Vistara.
It is understood that the plan is to achieve consolidation of AirAsia India into Air India Express over a one year period, while also targeting to bring all of the group's airlines businesses under the Air India umbrella by 2024.
AirAsia India commenced operations in June 2014.