Tata Sons will likely have to make a provision of Rs 2,600 ($325.69 million) as accumulated losses for its low-cost carrier AirAsia India, the Economic Times has reported. The conglomerate is seeking to absorb Air Asia India unit Air India and merge with Air India Express, the ET report has mentioned.
According to a report by Reuters, Tata Group-owned Air India proposed to buy the entire equity share capital of AirAsia India earlier this year, in which Tata has a majority stake, to merge into a single airline.
Tata Sons has an 83.67 per cent stake in AirAsia India.
No decision has been taken on whether the write-off will be included in the balance sheet of Tata Sons or Air India, the Economic Times reported, citing officials privy to the development.
Tata, Air India and AirAsia India did not immediately respond to Reuters' requests for comment. Both AirAsia and Air India are run by the Tata Group.
Air India is a wholly-owned subsidiary of Tata group, while AirAsia India is its joint venture with Malaysia’s AirAsia, which has 16.33 per cent of the shareholding.
Apart from this, the Tata group also operates full-service carrier Vistara in a joint venture with Singapore Airlines.
According to news reports, AirAsia India in December 2021 informed that it has paid all its dues to the Airports Authority of India (AAI) and the airline was making all payments as per credit terms on due dates from September 2021. AirAsia India’s dues to the AAI increased from Rs 1.47 crore in January 2020 to Rs 3.58 crore in October 2021, as per AAI’s internal documents.
Autos-to-steel conglomerate Tata bought state-run carrier Air India in a $2.4 billion equity and debt deal earlier this year, regaining ownership of what used to be India's flagship carrier after nearly 70 years.
The deal included three entities – full-service carrier Air India, its low-cost arm Air India Express, and AI SATS, which provides ground-handling and cargo services.