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Vistara pauses plane orders ahead of Air India merger, eyes international growth

By Aditi Shah

NEW DELHI, Jan 24 (Reuters) - Vistara has put the brakes on new plane orders while it awaits regulatory approval to merge with Air India, but that will not stop the airline from adding more international routes to boost profits, its chief executive said on Tuesday.

The full-service carrier, a joint venture between Singapore Airlines and India's Tata Sons, will receive its pending order for 17 aircraft by mid-2024 taking its total fleet to 70 planes. Tata also owns Air India.

"We have not looked at any orders beyond that," Vinod Kannan told reporters.

"There has been the announcement about the merger and integration with Air India. Once we have approval from the relevant authorities ... we will have to sit down together with Air India as a joint entity to see what we do," he said.

But Vistara's expansion will continue and the airline is "not going to scale back" because of the integration, he added.

Tata said in November it was merging its two full-service carriers - Air India and Vistara - to create a bigger airline to take on local rivals like IndiGo as well as Middle Eastern carriers that dominate outbound traffic from India.

Tata is also expected to announce on Friday a new plane order of some 495 aircraft for Air India, Reuters reported, as it looks to revamp the airline under its ownership.

Vistara, which started operations in 2015, recorded its first operational profit in the December quarter helped by strong travel demand and higher fares, despite surging fuel costs and a weak rupee versus the dollar.

Kannan hopes to continue the momentum and flying to more international destinations is a key factor.

"International is where we are going to focus. That is where value for money comes in for Vistara," he said.

Vistara deploys up to 30% of its capacity on 12 international routes including cities in Europe, the Middle East and Southeast Asia. These routes contribute 30% of its revenue.

The airline has put on the backburner plans to launch flights to the United States due to delays in receiving deliveries of its Boeing 787 widebody planes. It will instead strengthen its presence in Europe where it currently flies with load factors - a measure of how full its planes are - of 85% to 90%, Kannan said. (Reporting by Aditi Shah Editing by Mark Potter)