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AirAsia to sell 32.7 per cent stake in India unit to Tata Sons

Representational image | Reuters

After reports that AirAsia’s India wing had been “draining cash”, the Malaysian group has announcedthat it will be disposing of 32.67 per cent of its equity shares in AirAsia (India) Limited, its joint venture with Tata Sons, that is currently held by the Groups’ wholly-owned subsidiary AirAsia Investment Limited (AAIL).

The majority shareholder, Tata Sons, will acquire the stake for $37.7. million. This will bring down AirAsia’s ownership of the India unit to 16.33 per cent, while Tata’s stake bumps up to 83.6 per cent. Reuters reported that the group said it would complete its sale to Tata Sons by March 2021. In addition, Tata can exercise a call option on AirAsia’s remaining stake any time after the transaction.

The group would also waive unpaid brand license fees payable by AirAsia India to subsidiary AirAsia Berhad.

President (Airlines) of AirAsia Group, Bo Lingam said, “This transaction is in line with our initiatives towards reducing cash utilisation for the Group and will allow us to use cash to grow market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam.

“AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI. This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in Asean while continuing our market dominance for travel from Asean to India and North Asia,” he added.

“India will remain an important market for AirAsia. TSL has been an excellent partner and we look forward to continue working closely together in other areas of growth,” he said.

Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 30 Airbus A320 aircraft. The July-September quarter marked the fifth consecutive quarterly loss for the airline, hit like all other airlines by the COVID-19 pandemic and its impact on air travel. The Group had shut its Japan subsidiary in October in a bid to reduce cash burn.