Mumbai: Tata Sons is reviewing its budget airline joint venture with Malaysia’s AirAsia as the latter faces financial challenges exacerbated by the pandemic. The evaluation follows the Malaysian company’s reluctance to inject fresh equity into AirAsia India.
The holding company of the Tata Group, which owns 51% in the six-year-old low-cost carrier, is in discussions to buy out the remaining 49% held by AirAsia, said a source in the know. Tata Sons has the first right of refusal for the minority stake owned by AirAsia in the India venture.
AirAsia, which announced its biggest quarterly loss in August, plans to raise $600 million through debt and equity to weather the pandemic even as it evaluates some of its operations outside Malaysia. In recent months, AirAsia’s founder and CEO Tony Fernandes has said that India is a peripheral market, which it could exit one day. In July, AirAsia’s auditor EY had flagged going concern doubts on the company’s operations after its current liabilities exceeded assets.
“AirAsia, because of its financial difficulties, is not keen on infusing capital into the India JV. It wants the JV to take on debt to run the operations. Tata Sons is forced to consider buying out AirAsia,” said the source. Tata Sons declined to comment on the report.
05/10/20 Reeba Zachariah/Times of India
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