AirAsia India, which has been troubled during its six years or so of existence in India, might be getting ready to put behind its lousy run, as the two partners of the airline decide to change their roles and Tata Sons takes over the airline almost entirely. The airline was initially launched as a partnership between Tata Sons and AirAsia holding 49% each and 2% stake owned by Tata nominees. Tata Sons had recently turned the majority owner of the airline by buying out the 2% from their nominees. As recently as three months ago, AirAsia had commented that they wouldn’t be able to fund AirAsia India any further. This had led to a lot of speculation about AirAsia exiting their Indian investment.
This exit has now been finalised. AirAsia Investment Limited, the holding company for the Indian investment of AirAsia, today signed an agreement to sell 32.67% of its equity shares in AirAsia India Limited to Tata Sons Limited, to retain only 16.33% in the airline after the closure of this transaction. This transaction valued the airline at USD 115 million.
On this, President (Airlines) of AirAsia Group, Bo Lingam said, “This transaction is in line with our initiatives towards reducing cash utilisation for the Group and will allow us to use cash to grow market share in our core markets in ASEAN, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam. “
As part of the Transaction, there will be a Call Option regarding AirAsia’s remaining 16.33% stake in AirAsia India, exercisable by Tata Sons at any time after the current sale is completed. Besides, there will also be a Put Option exercisable by AirAsia in 2022.
While Tatas are expected to rename the airline, it will continue to operate as AirAsia India for the time being. Group companies of the Tata group are already working on taking over functions. For instance, TCS is working on a project for crew scheduling software so that the current software from AirAsia can be discontinued.
AirAsia India will leave the AirAsia fold shortly and continue for an independent existence for the time being while the Tata Group works on its bid for Air India. AirAsia has sold 32.67% (2/3rd of its stake) in AirAsia India to the Tata Group.