AirAsia says India business has been draining cash, hints at exit

President (Airlines) of AirAsia Group Bo Lingam said that a review of their investment in AirAsia India is ongoing.
AirAsia India
AirAsia India
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After months of back-and-forth, Malaysian carrier AirAsia, in a clear signal that it wants to exit the country, said that the airline is reviewing its investment in AirAsia India. In India, AirAsia India operates in a joint venture with Tata Sons, where it owns 49% and Tatas own 51%. 

In a statement, President (Airlines) of AirAsia Group, Bo Lingam said that the Indian business, along with the business in Japan, is draining cash, causing the group financial stress. 

“Our businesses in Japan and India have been draining cash, causing the Group much financial stress. Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” he wrote. 

He said that a network and fleet optimisation strategy has been implemented across the network. “We continually review our network to ensure we fly the most popular and profitable routes. Asean is where our brand and foothold is strongest and that’s where our immediate focus will lie. Furthermore, our low fares stimulate demand and grow the air travel market such as the recent launch of a number of new domestic routes where we have seen our market share grow,” he added.

The aviation sector was hit hard by the pandemic. In the third quarter, AirAsia said that there was a 79% increase in passengers carried by AirAsia India. 

AirAsia has been hinting at an India exit for some time now, and reportedly reached out to ask the Tatas to buy out its stake. In July, auditor Ernst & Young said that there is significant doubt over the AirAsia Group's ability to continue as a going concern as the group’s liabilities exceeded its current assets by $430 million at the end of 2019. At the time, it was also reported that Tata group was looking to exit the JV and focus on its other venture, Vistara, which is a joint venture with Singapore Airlines.

In October, it was reported that the AirAsia group stopped funding the Indian arm, and India’s civil aviation minister Hardeep S Puri even made a comment about the airline’s future in the country. 

For the quarter ending June, AirAsia India’s losses reportedly stood at Rs 332 crore, up from Rs 15 crore reported in the same quarter last year. 

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