Currently, Tata Sons has a 51 percent holding in AirAsia India. The company is in talks to buy the remaining 49 percent stake in the budget airline from the parent Malaysian company.
According to reports, Tata Sons is planning to buy the remaining stake due to financial difficulties caused by COVID-19.
AirAsia India is trying to raise around USD 600 million to cope with its financial losses
Reports state that, “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.”
Tony Fernandes, CEO, AirAsia said, “India is a peripheral market for the company. We would never say that we would ever exit India.”
According to a source, “Other options like a merger of the businesses of AirAsia and Vistara (a 51:49 joint venture between Tata Sons and Singapore Airlines) have also been considered. However, this may be tricky because Vistara is well-capitalised. Merging AirAsia India’s business during a downturn may suddenly weaken the merged entity’s financials, and cause more funding requirements, increase fixed costs, and so on. This may not be desirable to Singapore Airlines.”
Hardeep Singh Puri, Union Minister had mentioned that AirAsia might close its operations in the country. “Air Asia is downing its shutters. There are problems with the parent company. They may be in financial stress. That may be individual specific.”