Tatas to hold 49% stake in AirAsia India

Arun Bhatia’s Telestra decides to exit the no-frills airline

TATA Sons will hike its stake in AirAsia India to 49% by acquiring additional shares from Arun Bhatia's Telestra, which will be exiting the no-frills airline. Telestra Tradeplace holds nearly 10% stake in the low-cost airline. While Tata Sons would buy 7.94% shareholding, the remaining stake would be purchased by the carrier's two directors — S Ramadorai and R Venkataramanan, in their individual capacity.

Ramadorai, who is chairman of AirAsia India, and Venkataramanan would acquire 0.5% and 1.5% shareholding, respectively.

The development comes against the backdrop of Arun Bhatia expressing unhappiness over the state of affairs at the carrier. Besides, there have been concerns in certain quarters about control and ownership at the airline.

Last month, the airline appointed Amar Abrol as CEO replacing Mittu Chandilya.

The deal is expected to be completed next month, subject to relevant corporate approvals and processes, a Tata Sons statement said.

In this regard, an agreement was inked on March 14 by Tata Sons with Air Asia (India) Ltd, Telestra Tradeplace Pvt Ltd, Ramadorai and Venkataramanan.

Malaysia's AirAsia Berhad would continue to hold 49% stake in the airline.

Since its inception, AirAsia India witnessed some high profile exits like Vijay Gopalan, former chief financial officer and Gaurav Rathore, former commercial officer.

In 2014, AirAsia carried 3.28 lakh passengers in the domestic market which subsequently increased by 329.87% to 14.10 lakh passengers in 2015. This is significant lower than most of its peers.

“AirAsia needs to add more aircraft in its fleet and expand the route network. Otherwise it will be impossible to sustain in the immensely competitive market,” said an industry expert who did not want to be identified.

In the October to December quarter last year, AirAsia reported an operating loss of Rs 25.65 crore while revenue rose by 232% y-o-y to Rs 208 crore. For the quarter ending September 31, 2015, airline reported an operational loss of Rs 65 crore.

The low cost airline has been lobbying for the removal of the 5/20 rules for flying on international routes.

Last August, Tata Sons had acquired 10% stake from Telestra which took the former's overall shareholding then to little over 41%.

AirAsia India has a fleet of six aircraft, covering 12 routes and carrying over 1.8 million passengers.