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New Delhi: AirAsia Group Bhd. It has stopped funding its Indian subsidiary as the global travel slump leaves the Malaysian group struggling to maintain an expanding empire of simple airlines, people familiar with the matter said.
The future of AirAsia India Ltd. may now depend on the Indian conglomerate Tata Group, its majority shareholder, which has provided emergency funds but has yet to commit to a full bailout, according to the people, who asked not to be identified to discuss a matter. confidential. .
The airline is in no immediate risk of collapsing, the people said. India’s aviation minister said over the weekend that AirAsia would shut down its operations in the South Asian nation, though his office later suggested the comment was taken out of context.
AirAsia India declined to comment, as did a representative for the Tata Group. AirAsa Group did not respond to requests for comment after normal business hours.
AirAsia said early Monday that its Japanese arm will stop flying immediately as the coronavirus outbreak continues to affect the airline industry. The group, once the model for the low-cost travel revolution in the region, is seeking up to 2.5 billion ringgit ($ 600 million) to overcome the crisis.
AirAsia long travel arm X Meanwhile, Bhd. It has said it needs to reach agreements with major creditors to restructure debt amid “severe liquidity constraints” that threaten its ability to resume services and continue as a going concern.
AirAsia India has survived with 3,000 crore ($ 41 million) in funding from Tata, which owns a 51% stake, and another round of funding is expected soon, one of the people said.
Tata is weighing his options and how much it would cost to buy AirAsia and save the carrier, another person said. The industry group also has a 51% stake in the full-service airline Vistara with Singapore Airlines Ltd.
AirAsia India predicted that it would break even in four months when it started flying in 2014. In reality, it has yet to make money in a market where high fuel taxes and fierce tariffs can make even dominant players unprofitable. . The airline has a 6.8% market share and employs more than 3,000 people.Bloomberg
Read also: Uncertainty over AirAsia’s future in India following Minister Puri’s ‘closure’ comment
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