AirAsia likely to exit India ops, end JV with Tatas
Malaysian airline Air Asia reported this week that it was reviewing its operations in India, which it runs in partnership with Tata Sons in the country. This signals a possible exit of the carrier from the fifth largest economy of the world. The airline had entered the country six years ago with considerable business expectations. The airline said that the Indian leg of their operations has been draining cash, further compounding their financial woes that already stand aggravated due to global travel restrictions that have been set in place courtesy of Covid-19.
AirAsia holds 49% of the Indian unit, which has been unprofitable from the very beginning, while Tata Sons holds the remaining portion of 51%. The Malaysian carrier’s review of its operations in India comes on the heels of a bankruptcy filing by its Japanese arm. Citing highly challenging operating conditions, the airline ceased flying in Japan in the last month itself.
AirAsia told the media that the group is witnessing substantial financial stress owing to its cash-drainingoperations in India and Japan. Citing the recent closure of AirAsia Japan, he said that they were pushed to review their investment in AirAsia India after having prioritised reducing cash burns, and cost containment during these times.
Tata Sons holds the power to exercise the first right of refusal for AirAsia’s minority stake in the India venture. Tata Sons is in discussions to buy out the Malaysian airline after the latter expressed their hesitation to pump fresh funds into the India joint venture. In FY2020, AirAsia reported a loss of Rs 317 crore.