Monday, August 30, 2021

Tata Sons likely to create holding company to bid for Air India

New Delhi: Salt-to-software conglomerate Tata Sons is keen to create a holding company for its aviation business to bid for Air India and also bring under its wing the low-cost airline, AirAsia India, a subsidiary of the group. The Economic Times citing officials close to the development mentioned in a report that the holding company is expected to submit bid for Air India by September 15.

The government wants to complete Air India sale by December this year.

Worth mentioning here is that Vistara Airlines, which is a joint venture between Tata Sons and Singapore Airlines, will not be a part of this holding company although the conglomerate is keen to bring Vistara under the holding company in the near future. 

Currently, Tata group’s airline businesses — comprising Vistara (registered as Tata SIA Airlines) and AirAsia India — are seen as subscale and in need of momentum, the publication mentioned citing an insider. Tata Sons is not keen to have three separate airline companies; this is not seen as operationally cost-effective or viable. Tata Sons owns close to 84% of AirAsia India, while the remainder is with Malaysian low-fare carrier AirAsia Bhd.

If Tata Sons acquires Air India, it will compete directly with Vistara, in which the conglomerate holds 51% stake. Bringing Vistara under the holding company with Air India could help with operational synergy and economies of scale, the ET report mentioned citing unnamed officials.

According to its latest annual report, AirAsia India’s net loss almost doubled in FY21 to Rs1,532 crore and its net worth slipped into negative territory as the pandemic hit aviation industry globally.

Its revenue plunged 63% year-on-year to Rs 1,359 crore, while accumulated losses grew to Rs 3,680.34 crore. Auditors SR Batliboi & Associates said AirAsia India’s dwindling finances, coupled with the long-reaching effects of Covid-19, cast doubt on its ability to remain a going concern.


To Read the News in full at Source, Click the Headline


Post a Comment