MIAMI – Tata Sons, which currently owns 51% of AirAsia India (I5), is considering buying the remaining 49% stake in the budget airline from the parent Malaysian company, AirAsia (AK). The move comes after financial difficulties caused by the pandemic.

AirAsia India was established as a joint venture in 2014. Tata Sons originally held a 41.1% stake in the company, before upping it to 51% in 2018. The carrier has a market share of 6.8% and employs more than 3,000 people. 

When it was founded, I5 predicted it would break even in just four months.  However, the airline has struggled to turn a profit and reported its biggest quarterly loss in August 2020. In July, AK’s auditor EY had growing concerns about the company’s operations as its liabilities exceeded its assets. So far this year Tata Sons has invested 4.9 billion rupees into I5.

Photo: Air Asia

Financial Difficulties

The Times of India cited sources close to the airline as saying “AirAsia, because of its financial difficulties, is not keen on infusing capital into the India joint venture. It wants the joint venture to take on debt to run the operations. Tata Sons is forced to consider buying out AirAsia.”

Back in June, AirAsia Chief Executive Officer Tony Fernandes reportedly referred to India as a “peripheral market for the company” and went on to say “We would never say that we would never exit India.”

Photo: P. Pigeyre via Airbus

Reconsidering Operations

AirAsia plans on raising as much as $600 million by the end of the year in order to continue operations amidst massively reduced demand due to the COVID-19 pandemic. The Airline is reconsidering much of its operations outside of Malaysia, as global demand for air travel remains supressed.  

Air Asia runs subsidiaries in Thailand, Indonesia, Philippines, and Japan, as well as long-haul budget option Air Asia X. AK also announced it would cease its operations in Japan.

Featured image: AirAsia. Photo: Wiki Commons