The Tatas have also invested in Air Asia India's optionally convertible debentures (OCDs) worth Rs 550 crore which, when converted, will increase Tata’s stake to 60 per cent from the present 51 per cent.
An email sent to Air Asia Berhad and the Tata group
did not elicit any response.
For both Tata and Air Asia Berhad, the exit of AAB is necessary as Tatas want to consolidate their stake in the low-frills carrier, while AAB requires funds back home in Malaysia where it is facing a tough financial situation following the Corona pandemic, which has led to a collapse of air traffic.
Another big hurdle faced by Air Asia in India is the ongoing investigations by the Enforcement Directorate and the Central Bureau of Investigation for paying bribes to get airline permits. The foreign investors are planning to seek indemnity from any investigation if they invest in Air Asia India.
“The ball is now in the Tata’s court. AAB can give 30-day notice to the Tatas as per RoFR norms and then it can sell the stake to a third party. With a $54 million offer in AAB’s hand, there is a benchmark price for further negotiations,” said a banker close to the development.
The Tata group
is already running two airlines
in India – Vistara and Air Asia India and there were reports that the group is also interested in bidding for Air India.
Both Vistara and Air India are making huge losses. In the current fiscal, like Air Asia India, Tata SIA Airlines
– the operator of Air Vistara -- has received equity infusion from both partners to the tune of Rs. 500 crore in April 2020.
The Corona pandemic has hit both airlines
with Air Asia India reporting a loss of Rs 330 crore in the March quarter on revenues of Rs 928 crore. This was as compared to a loss of Rs 147 crore on revenues of Rs 631 crore in the March quarter of 2019.
Air Asia India net worth turns negative
Foreign investors see value in Air Asia India
Tatas will have to match foreign fund's offer
Funds want indemnity from any investigation by Indian govt