Fledgling Vistara won’t support SIA’s struggling profits in 2015

It will be loss-making for at least a year.

Vistara, SIA’s joint venture airline with Tata, won’t provide a boost for the national carrier in the near-term. Vistara clinched its Air Operator Permit on December 16, and the carrier will commence operations on January 2015.

According to OCBC, SIA has already started to equity account in its books for its share of Vistara’s start-up costs since 2QFY15, and these will increase significantly as Vistara scales up.

“Hence, we think the JV will continue to see net loss position for at least the first year of operations and likely even beyond that. Note that SIA will record Vistara’s results under the line item 'share of losses of associated and JV companies',” stated OCBC.

Here’s more from the report:

The airline’s 148-seater A320-200 will offer seats in economy, premium economy and business classes, with Delhi serving as its hub.

Vistara is the third full service carrier in India after state-run Air India and Jet Airways; but it will be the first to offer premium economy class.

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