Tatas to hold 49% stake in AirAsia In­dia

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

The Financial Express - - COMPANIES - Fe Bureau

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.

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