Thursday, November 28, 2019

Losses mount for Tata Group’s aviation ventures

Losses are mounting at the airline firms of the Tata Group – AirAsia India and Vistara. While Vistara’s losses in financial year 2018-19 nearly doubled to Rs 830 crore compared to the previous year, AirAsia’s losses quadrupled to over `670 crore in the same period. Tata Sons holds 51% stake in both airlines. Both have incurred losses through the past four financial years.

In FY19, AirAsia’s other expenses saw a 70% y-o-y increase to Rs 2,830.62 crore. The airline’s liabilities went up 84% y-o-y to Rs 1,537.07 crore during the year, on account of its trade payable more than doubling to `827.8 crore. The airline saw a net decrease in cash and cash equivalents of Rs 103.67 crore in FY19 against a net increase of Rs 93.47 crore in FY18.
The Tata Group infused over Rs 307 crore capital into AirAsia in FY19, according to data sourced from the ministry of corporate affairs (MCA). Tata Sons also bought 2% stake from two other shareholders, taking the company’s total holding in the airline to 51% in FY19.
The company’s auditors last year had also expressed “material uncertainty about the company’s ability to continue as a going concern,” according to financials filed by the company with the MCA.

Vistara’s losses in FY19 were primarily on account of 48.3% y-o-y increase in other expenses to Rs 3,436.31 crore. The airline’s finance costs more than doubled y-o-y to Rs 19.01 crore. The full-service carrier’s liabilities rose 41.5% y-o-y to Rs 1,123.96 crore, of which trade payables consisted of `302.73 crore, up 50% y-o-y.

The net increase in cash and cash equivalents during FY19 stood at `204.63 crore, down 23.4% y-o-y. Total capital infusion into Vistara during FY19 stood at Rs 2,200 crore, of which Tata Sons, along with nominees, infused `1,122 crore.

One of the challenges for Vistara, a joint venture between the Tata Group and Singapore Airlines, is that the full-service model has been a challenge, said analysts.
28/11/19 Financial Express

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