Tata Sons Might Exit AirAsia Looking at Continuity Concerns of the Airline

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Yesterday we reported that Tata Sons may completely buyout the AirAsia Group Berhad. But it looks like that is not going to happen after all. According to some reports, Tata Sons is planning to exit from the group. As of now, the Indian conglomerate owns 51% of the AirAsia Group Berhad. AirAsia has had to go through a series of losses. Its financial reports are nothing but a nightmare for the investors of the airline. Tata Sons, the majority stakeholder in the airline may sell its stake. AirAsia approached the Indian conglomerate back in June to sell its 49% stake, but the deal didn’t seem quite attractive to Tata Sons.

Also Read - AirAsia Group Berhad Might Be Acquired By Tata Sons Completely

Tata Sons to Leave AirAsia and Focus on Vistara

For the unaware, Tata Sons is also in a joint venture with Singapore Airlines and is running Vistara. In this joint venture as well, Tata Sons own the majority stakes of the airline (51%). The remaining 49% stake is owned by Singapore Airlines. The Tata group is not much interested in staying invested in the budget airline AirAsia which is going through a very tough phase.

Talking about AirAsia India, it had started its services in 2014. In the last few years, it has kept losing money. According to an anonymous source, the airline hasn’t even reached its break-even point yet. As per the Aviation consultancy Capa India, AirAsia India can report a loss of more than $60 million in the fiscal year 2020 if things remain the same. Tata Sons being aware of the same, rejected AirAsia's offer of purchasing the remaining 49% stakes.

None of the airlines in the market are having a jolly time. But AirAsia has become the highlight since Ernst and Young shared its audit report of the airline. According to their report, the budget airline had a loss of $282 million where its current liabilities were more than current assets by $430 million for the FY 2019-20. With the aviation market not shifting anytime soon towards its usual traffic and demand, things look bad for AirAsia. So it makes sense if Tata Sons is not interested in the airline and its future anymore. Despite the growing concerns, Tony Fernandes, AirAsia CEO said that the airline can be profitable soon. It will happen if they manage to raise 2 billion ringgit ($469 million).

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Tanay hails from Bilaspur, Chattisgarh and is a sports and fitness enthusiast. Reading and writing is something which comes to him out of love for the web of magic that words can create.

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