Tony Fernandes, Head of Malaysia-based AirAsia Group.
YOSHIKAZU TSUNO / AFP tro Getty Images
Tony-Fernandes-based budget carrier tycoon Tony Fernandes is selling a 32.7% stake in their venture in India to its partner Tata Sons.
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Tata, which already controls a 51% stake in AirAsia India, will buy the additional bet for around $ 37.7 million, according to a filing to Kuala Lumpur Stock Exchange. AirAsia Group will continue to maintain a 16.3% stake in the carrier.
“This deal will reduce the Company’s cash flow in the short term and allow AirAsia to focus on regaining its key ASEAN markets in Malaysia, Thailand, Indonesia and the Philippines in the long term,” the filing said.
Launched in 2014, AirAsia India promised to be profitable within four months, but the carrier never turned a profit.
The airline’s industry has been hit hard by the coronavirus pandemic, with fleets of aircraft set up as travel barriers but eliminating passenger traffic. Money carriers like AsiaAsia have been scrambling to restructure amid rising debt. “Maybe I’ll win the award for the most affected [by the pandemic], ”Fernandes said at the Forbes Asia CEO Webinar on December 2nd.
Fernandes began low-cost travel in Asia after buying its famous airline in 2001 for just 1 Malaysian ringgit, or $ 0.26. The former Asia-Pacific air travel music operator changed by introducing the concept of a no-frills airline and pushing countries to liberate their air markets. AirAsia estimated that up to half of its passengers are first-time flights.
This year, Fernandes has been raising capital and restructuring its AirAsia group to allow the company to focus on recovery in key markets in Southeast Asia. “We’ve let people go that didn’t do anything wrong,” he said at the Forbes Asia CEO Webinar. “That was very sad. My only responsibility now is to protect so many jobs. AirAsia lost $ 238 million in the second quarter, and its share price fell 47% in 2020.
Fernandes said it lost revenue as a result of the pandemic AirAsia to seek support from the Malaysian government for the first time. Although financing details have not been released, Fernandes struck a note of hope when he told Bloomberg TV earlier this month that air travel is expected to return to pre-pandemic levels in the next six to 12 months. ahead.
For Tata, the deal strengthens the asset portfolio of Indian conglomerates in the aviation industry. Tata is currently bidding to acquire an Air India flag carrier, and already has majority ownership in Vistara, another full-service carrier in India.
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