AirAsia To Dilute Shares In AirAsia India, To Sell 32.67% Stakes To Tata Sons

AirAsia Group said it plans to sell 32.67% of its stake in its Indian operations to Tata Sons. Tata buys additional stake in AirAsia India for $37.7 million. Tata Sons now to hold 83.69% stake in the budget carrier with the option to buy the remaining 16.33% stake.

An Indian airport staff member walks next to an AirAsia airplane after it landed on its inaugural flight from New Delhi to Bagdogra Airport, some 20km from Siliguri, on February 19, 2017. - Asia's biggest budget carrier AirAsia launched its service to Bagdogra airport in West Bengal, a gateway to popular eastern Indian destinations such as Darjeeling. (Photo by DIPTENDU DUTTA / AFP)

Tata Sons acquired an additional 32.67% stake in AirAsia India (AAI) from AirAsia Group Berhad for $37.7 million (Rs 276.6 crore), thereby reducing the Malaysian carrier stake to 16.33%. Confirming the development, Bo Lingam, President (Airlines) of Autilizationp, said, "this transaction is in line with our initiatives towards reducing cash utilisation for the Group." Tata Sons earlier held a 51% stake in AirAsia India, and the Malaysian flagship budget carrier - AirAsia Berhad - owned 49% of the stake in Indian business. According to Lingam, the transaction will allow the airline to use cash to grow market share in our core markets in ASEAN, particularly in Malaysia, Thailand, Indonesia, and the Philippines, and for our future expansion into Cambodia, Myanmar and Vietnam. The announcement comes two months after AirAsia shut its operations in Japan, citing highly challenging conditions amid the pandemic. "AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI. This transaction will ensure strict cost containment for AirAsia Group in the short term and strengthen our presence in ASEAN while continuing our market dominance for travel from Asean to India and North Asia," said Lingam. Tata's move to consolidate its control in AirAsia India comes at a time when the group has shown preliminary interest in acquiring state-owned Air India in the ongoing divestment process. "As part of the transaction, there will be a call option regarding Air Asia Investment Limited (AAIL's) remaining 16.33% stake in AAI, exercisable by TSL at any time after the transaction is completed. There will also be a Put Option to be exercised by AAIL in two tranches, with the first tranche being exercisable from 1 March 2022 until 30 May 2022, and the second tranche being exercisable from 1 October 2022 to 31 December 2022," said the Malaysian carrier in filing to the exchange. READ: Temporary UK Travel Restrictions Won't be 'Indefinite', Says Aviation Minister The total consideration regarding the options granted for AAIL's remaining 16.33% stake shall be $18,830,000 (equivalent to approximately Rs 138.25 crore). Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 30 Airbus A320 aircraft. Meanwhile, India's international services from Malaysia and Thailand will resume in the future after travel restrictions are lifted, and borders with India are reopened. AirAsia operates over 100 weekly flights from Malaysia and Thailand to nine destinations in India. IN PICS: Powerful Farmers Showdown At Delhi Borders Ahead Of Round 6 Talks With Centre AirAsia Group has transformed into a digital travel and lifestyle platform with airasia.com and digital ventures in logistics, e-commerce, fintech, and fast-food chains. AirAsia Group also operates a regional technology center in Bengaluru, India. Tata Sons officials confirmed the development. However, a Tata Sons spokesperson declined to offer any comments.