 "AirAsia India appoints Amar Abrol as new CEO; Chandilya to go")
At present, it has 41.06 per cent. It will acquire 7.94 per cent from Arun Bhatia-controlled Telestra Tradeplace. The remaining two per cent of Telestra’s stake will be acquired by Tata veterans and AirAsia board members S Ramadorai (0.5 per cent) and R Venkataramanan (1.5 per cent).
Read more from our special coverage on "AIRASIA INDIA"
The share sale is expected to be completed next month, resulting in Bhatia’s exit from the airline. With its nominees on the board, Tata Sons will have the controlling stake of 51 per cent in AirAsia — and could well be calling the shots, claim experts.
Telestra Tradeplace has one seat on the Board of AirAsia India and it will relinquish it when the transaction is completed, a Tata Sons spokesperson said.
AirAsia is a Malaysian low-cost airline, with its headquarters in Kuala Lumpur; it was a sponsor for the football club Manchester United.
Its India operations began in 2013, with Tata Sons holding 30 per cent stake, Delhi-based Arun Bhatia 21 per cent and the parent company 49 per cent in the joint venture. Its first flight was between Bengaluru and Goa on June 12, 2014.
Now, the Tatas are likely to have a greater say in its operations, including key decisions in the airline’s future and appointments.
Earlier this month, AirAsia group co-founder and Chief Executive Officer (CEO) Tony Fernandes had appointed Amar Abrol as CEO of AirAsia India. Till recently, Abrol ran Tune Money, a start-up funded by Fernandes.
Soon after the appointment, Fernandes had tweeted: “Great to see Tata and board members so confident of the future of AirAsia India. I am thrilled.”
Such appointments in the future could be made by the Tatas.
The value of the transaction that will put them in the cockpit of the company was not disclosed. The transaction price is based on negotiations between the parties, and is confidential, the Tata Sons spokesperson added.
The move is also expected to pave the way for a long-delayed capital infusion into the airline, providing a much-needed boost. The airline has been hamstrung because of differences between shareholders, losses and top-level attrition (see chart).
This will also address — to some extent — allegations that both the airlines held by the Tatas (Vistara and AirAsia) are controlled by foreigners.
AirAsia India has a fleet of six Airbus A320 planes and a market share of about two per cent.
The promoters had committed $30 million (Rs 190 crore) initial investment.
Fernandes and Tata group Chairperson Emeritus Ratan Tata share a bond because of their aviation interests.
Bhatia being chosen as the third partner had come as a surprise to many.
Bhatia’s son Amit, who is married to steel tycoon L N Mittal’s daughter Vanisha, is an independent non-executive director on the board of the AirAsia group. He is also involved with Queen Park Rangers football club, which is co-owned by Fernandes and Mittal.
The airline’s first 18 months have been marked by an ugly spat between Bhatia and the Malaysian partners.
Bhatia did not participate in last round of fund infusion in 2015, which saw his stake being reduced to 10 per cent (and Tata
Sons increase to 41.06 per cent). He accused Fernandes of remote-controlling the airline, which was denied by both the Tatas and Fernandes.
Bhatia had then blamed poor management and expensive third-party agreements signed with the Fernandes grouap entities as reasons for losses.
Sources said the Tatas and Bhatia were negotiating the stake-sale for the past several months but could not conclude the deal because of valuation disagreement.
In a statement, Tata Sons said it has entered into an agreement with AirAsia India Limited and Telestra Tradeplace for the stake purchase.
The agreement was entered into on 14 March, and is likely to be completed next month.
BUMPY FLIGHT
It’s hardly been a smooth flight for AirAsia in India, with many senior management figures calling it quits:
2013
- February: Malaysian AirAsia announces tie-up with Tata Sons & Telestra Tradeplace to operate a domestic airline
- May: Mittu Chandilya appointed as CEO of AirAsia India. Tony Fernandes, CEO of AirAsia group, tweets: “Mittu is coming home to change Indian travel and make it affordable”
- May: AirAsia India gets DGCA permit
- June: First flight between Bengaluru and Goa
- August: Tata Sons increases stake in the airline to 41 per cent after Bhatia refuses to take part in fund-raising. Chandilya becomes managing director. Chief Financial Officer Vijay Gopalan quits
- December: Bhatia accuses Fernandes of remote- controlling the airline. Tatas and Fernandes deny charges
- March: AirAsia India announces Amar Abrol as its CEO, replacing Chandilya. Also, new CFO Ankur Khanna and commercial head, Kiran Jain
- Arun Bhatia exits. Tata Sons announces hiking its stake in the airline to 49 per cent after purchasing Bhatia’s 7.94 per cent
