Wednesday, July 28, 2021

international

AirAsia completes deal to reduce stake in India JV


PETALING JAYA: AirAsia Group Bhd has completed the disposal of 32.67% of its stake in AirAsia (India) Ltd (AAI) to Tata Sons Private Ltd (TSL) for US$37.66mil cash.

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The transaction, which was completed on Dec 31,2020, reduced AirAsia Group’s interest in AAI to 16.33%, which it held through its wholly owned subsidiary AirAsia Investment Ltd (AAIL).

AAI is a joint venture (JV) between TSL and AirAsia Group.

AirAsia Group president (airlines) Bo Lingam said: “This transaction is in line with our initiatives towards reducing cash utilisation for the group and will allow us to use cash to grow market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam.”

According to Bo, AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI.

“This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in Asean, while continuing our market dominance for travel from Asean to India and North Asia, ” he explained.

“India will remain an important market for AirAsia. TSL has been an excellent partner and we look forward to continue working closely together in other areas of growth.”

Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 30 Airbus A320 aircraft.

The reduction of AirAsia Group’s stake in AAI had been viewed positively by analysts, as the transaction would raise the much-needed cash for the low-cost carrier.

MIDF Research said the deal would help improve AirAsia Group’s dire cash position, and highlighted that the group cash balances stood at RM618.2mil based on the latest third quarter results.

The research unit said with a monthly burn rate aound RM200mil during the nine months under review, any additional cash generated would be a boon to the group.

TA Securities Research was also positive on the deal, saying the decision would raise some cash for the group and reduce its liabilities on aircraft leases.

Published : January 06, 2021

By : The Star/ANN