 "Tata Sons to raise stake in AirAsia India to 41%")
AirAsia India is a joint venture between Malaysian low-cost airline AirAsia Berhad, Tata Sons and Arun Bhatia’s Telestra Tradeplace. Telestra Tradeplace was to subscribe to 21 per cent equity in the airline but it hasn’t done so. According to the original investment plan, the three partners had committed to invest $30 million in the airline.
A Tata Sons spokesperson said: “We are in the process of subscribing to the capital of AirAsia India, which will raise our stake to 41.06 per cent from the current 30 per cent.” Sources said an announcement on the issue was expected on Monday.
More From This Section
Tata Sons holds 51 per cent stake in full-service airline Vistara, while Singapore Airlines accounts for the remaining stake.
The change in AirAsia India’s ownership structure comes at a time when the airline is going slow on its expansion plans, owing to policy uncertainty, after beginning operations in June last year.
The move also comes with changes in the company’s top deck. Now, AirAsia India’s chief executive officer (CEO) Mittu Chandilya (pictured) would also be managing director, sources said. Chandilya will also be on the board of the company. Apart from Chandilya and AirAsia founder Tony Fernandes, other members on the AirAsia India board include S Ramadorai, Bharat Vasani, R Venkataramanan and Arun Bhatia.
The airline is likely to name a new chief financial officer soon. Incumbent Vijay Gopalan quit the airline recently, after a one-year stint. “Gopalan has decided to resign for personal reasons. This has been a long conversation and drawn-out decision. His contribution to help fuel a start-up such as AirAsia India is immensely appreciated…We, through our board of directors, are already in the process of identifying a suitable replacement for this critical position,” Chandilya said in a statement.
Initially, the airline had planned to induct an aircraft every month, considering the potential of the low-cost carrier model in India. However, in about a year, the airline has added only five aircraft to its fleet. It plans to add three or four more by the end of this year.
The airline hasn’t been able to break-even so far; it posted a net loss of Rs 19 crore for the quarter ended March this year. For the previous quarter, the net loss stood at Rs 21 crore. In an interview in May this year, Chandilya told this newspaper the airline “is very close to breaking even”.
Recently, AirAsia India chose Delhi as its hub in north India. It has decided against launching operations from Mumbai, as it is focusing on Tier-II cities.