Tata Sons is all set to boost its aviation venture AirAsia India after failure of its joint venture partner, Malaysian airline AirAsia Berhad, to fund the company. Currently, Tata Sons owns 51 percent in the joint venture and AirAsia Berhad has the rest.
According to Business Standard, the conglomerate is likely to invest more than Rs 500 crore in the form of operationally convertible debentures (OCDS). This move has the possibility to convert debt into equity.
The newspaper quoted a source as saying that that the Tata Group has assured of business as usual and says there is no chance that the airline will shut because of the stress caused by the coronavirus.
Currently, AirAsia India has a fleet of 30 Airbus A320 planes. Starting from the third week of this month, the airline will induct five new aircraft.
Analysts said AirAsia should consider leaving the Indian venture.
"We may turn even more positive should Air Asia Group cease the operations of 49 percent owned Airasia India as well. For FY21, we forecast Airasia group to recognise its share of loss from AAI as a larger RM 275 million(estimated to about 400 crore)," said Maybank Group.
07/10/20 CNBC TV18
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