Tata group to infuse $50 million in AirAsia India: Report
The Tata-group">Tata group is poised to provide as much as $50 million (approximately Rs. 370 crore) in emergency funding to AirAsia India, according to a report. The Tata group owns a 51% stake in AirAsia India, which is its joint venture in India with Malaysia's AirAsia Group Berhad. The development comes as the Malaysian carrier has stopped funding Indian operations amid the COVID-19 pandemic.
Tata group's stake in AirAsia India to likely increase
The Tata group will provide $50 million to AirAsia India, two people familiar with the matter told Mint. The fund infusion through a mix of debt and equity will likely increase Tata's stake in AirAsia India beyond 51%, they said. One of the two people said that the Tata group is looking beyond the pandemic and believes the domestic aviation market will recover soon.
'Tata group may look for suitable partner'
The source said, "The Tata group will remain invested in AirAsia India though it may seek out a suitable partner to invest in the airline in the future." They added, "The Tata group...firmly believes that the domestic aviation market will come back strongly in the medium term and that there is clearly enough space in the market for a domestic LCC (low-cost carrier)."
AirAsia India suffered major losses during pandemic
AirAsia Group—which owns the remaining 49% stake in AirAsia India—had recently said it is reviewing its joint venture with Tata Sons owing to losses caused amid the pandemic. Since starting operations in 2014, AirAsia India has never reported an annual net profit. The losses had widened to Rs. 332 crore in the June quarter compared to Rs. 15.11 crore loss a year earlier.
Businesses in Japan, India draining cash: AirAsia Bhd
AirAsia Berhad had said last week, "Our businesses in Japan and India have been draining cash, causing the group much financial stress." The statement added, "Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India." However, it had said its focus would remain on the ASEAN region.
Earlier this year, airline had slashed pilot salaries
In May and June, AirAsia India had slashed pilot salaries by an average of 40%. In July, AirAsia had reportedly approached the Tata group to sell its stake. AirAsia India has roughly 2,500 employees, including 600 pilots for its fleet of 30 Airbus A320 planes.
Tata group, Singapore Airlines pumped Rs. 585 crore in Vistara
The Tata group, which also owns a controlling stake in Vistara, and Singapore Airlines had recently invested Rs. 585 crore in the airline, The Economic Times had reported on Monday. Airlines in the Asia-Pacific region are the hardest hit by the coronavirus pandemic. This year, losses are expected to climb up to $29 billion, according to industry lobby group International Air Transport Association (IATA).
