AirAsia India initiated its operations in the country back in 2014. After years of providing services, the airline remains unprofitable. AirAsia India is a joint venture between Tata Sons and AirAsia Malaysia. Tata Sons is the majority stakeholder in the airline owning 51% of the company and AirAsia group owns the rest 49%. Due to it being non-profitable for very long, AirAsia Malaysia has become reluctant to inject any more fresh capital into the airline. This may very well force Tata Sons to buy out the remaining company from its Malaysian partner.
Tata Sons Can Buy Out the Remaining AirAsia India Stake
Back in July, EY, the auditor of AirAsia had raised a concern for the airline’s future when its current liabilities exceeded the assets. Then in August, the airline posted its biggest quarterly loss ever. Now it looks to raise around $600 million in debt and equity to compensate for the losses.
As per a TOI report, Tata Sons might look to buy out the entire company because AirAsia Malaysia wants to raise more debt. Tata Sons have already invested Rs 490 crore in the FY20 and the airline has posted a net loss of 317 crores.
Tony Fernandes, Founder and CEO of AirAsia India has expressed earlier that India is a peripheral market for AirAsia Malaysia. Thus the airline might exit the country if it feels that’s the right thing to do. When it does so, Tata Sons will have the chance to buy out the entire airline and operate it independently.
Tata Sons is already operating another airline Vistara in a joint venture with Singapore Airlines. So the group has the knowledge to run an airline already. Before Vistara and AirAsia India, Tata group also operated Air India until it converted into the national airline.
At this moment, it is hard to say which way Tata Sons will go. It has already faced a lot of losses with the airline and it might not be too happy with operating it further. But if AirAsia were to exit and Tata group were to get full control of the management, things for the airline might change in the future. Only time will tell what will happen to AirAsia India.