Tata Sons plans to sell entire stake in AirAsia India amid COVID-19 concerns: Report

Tata Sons is reportedly planning to shed its entire holding in loss-making AirAsia India, its joint venture (JV) with AirAsia. Tata Sons presently holds 51 percent majority stake in the company, while AirAsia Bhd owns 49 percent. In India, the airline commands a 7.8 percent market share.

A source told Mint that AirAsia Bhd approached the Tata Group in June to sell its 49 percent stake, but latter used its first right of refusal as per terms of the joint venture to reject the move.

“Tata is not very keen on staying invested in AirAsia India. AirAsia’s Malaysian partner had approached Tata Sons to sell its 49 percent stake, but Tata has not accepted the offer. In fact, the plan, which is in a preliminary stage, is to exit holding in AirAsia India and focus more on Vistara," a second source said.

AirAsia has been hit hard by the coronavirus pandemic. In fact, International Air Transport Association (IATA) expects the Asia-Pacific region to clock $29 billion in losses for the year – more than a third of the $84.3 billion industry losses globally.

“2020 has been the worst in aviation history and airlines are in survival mode. The carriers in Asia-Pacific will experience the largest losses at $29 billion. That’s a loss of $30.09 per passenger,” noted Conrad Clifford, IATA’s Regional Vice President for Asia Pacific.

AirAsia Bhd CEO Tony Fernandes had in fact cited a Credit Suisse report to state that the company continues to grow in key markets, but “would be open to exiting India.”

AirAsia India has been bleeding despite conservative growth plans since its launch in 2014. “The airline hasn’t been able to able to break even yet,” the source said. The company has also been plagued with legal issues after Fernandes was summoned by the Central Bureau of Investigation (CBI) for alleged bribery and corruption charges in 2018.

Source: https://www.moneycontrol.com

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