Tata Sons, the holding company of the Indian conglomerate Tata Group, is in talks with the Malaysian joint venture partner AirAsia to fully acquire the ownership of the loss-making budget carrier AirAsia India.
Tata Sons currently holds 51 per cent in the low-cost carrier that marked the group's re-entry into the aviation sector after it forfeited the ownership of Air India, the airline it founded in 1934, consequent to a takeover by the Indian government as part of a nationalisation drive.
Tata group also operates Vistara, a full-service airline, in partnership with Singapore Airlines.
With the acquisition of the remaining 49 per cent in AirAsia India, the Indian business group, which is currently in the fray to reclaim the troubled national carrier Air India, will take full control of AirAsia India, sources closely following the development said.
Tata Sons' move is subsequent to a reluctance shown by AirAsia to inject fresh capital into the cash-strapped Indian joint venture hit by pandemic travel restrictions. "Tata Sons is forced to consider buying out the Indian JV as AirAsia is not keen on infusing capital into the India JV," an informed source was quoted as saying.
As per the JV between Tata Sons and AirAsia, the former has the first right of refusal for the minority stake owned by the Malaysian company in the Indian venture.
Since its launch in 2014, AirAsia India has been facing headwinds. Tata Sons, which invested Rs4.9 billion in the LCC, said in its FY2020 report that the loss-making airline's net worth was completely eaten away as the JV posted a loss of Rs3.17 billion in the same period, raising serious concerns about the JV's ability to stay afloat.
Tony Fernandes, AirAsia CEO, did not deny his willingness to part ways, saying, "we would never say that we would never exit India."
Sources said AirAsia, which announced its biggest quarterly loss in August, plans to raise $600 million through debt and equity to weather the pandemic even as it evaluates some of its operations outside Malaysia.
