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.
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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.
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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.