Days after reports of Tata Sons looking to buy out AirAsia India’s stake from its joint venture partner, Livemint reported on Monday that Tata sons is now looking to exit airline.
AirAsia India is a joint venture (JV) between the Tata group and Malaysia-based AirAsia Berhad, where the Tatas own 51% stake and the remaining 49% is with AirAsia Bhd.
The Malaysian airline group, which has been reporting losses, reportedly approached the Tatas in June to sell its part of the stake. The offer was turned down by Tata Sons because the company doesn’t want to continue investing in AirAsia India.
As per the terms of the JV, Tata Sons has the right of first refusal since it is the majority shareholder.
The Tata group reportedly wants to focus on its full-service carrier Vistara. Vistara Airlines is a JV with Singapore Airlines.
In India, AirAsia holds a 7.8% market share and is in the fifth position, as per the Mint report.
Business Standard reported last week that AirAsia Berhad registered a loss of $188 million in the March quarter, while AirAsia India saw a loss of Rs 330 crore.
On Wednesday, auditor Ernst & Young said that there is a significant doubt over AirAsia Group ability to continue as a going concern as the group’s liabilities exceeded its current assets by $430 million at the end of 2019.
EY had said in an unqualified audit opinion statement that the slump in air travel combined with the airline’s poor financial performance indicate existence of material uncertainties that “may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern.”
Tatas exiting AirAsia India could mean the airline’s exit from the Indian market, something AirAsia group CEO Tony Fernandes hinted towards in June, where he said, “we would never say that we would never exit India.”
This news also comes at a time when the Tata group has emerged as the sole bidder for India’s nationalised carrier Air India.