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(Oct 6): AirAsia Group Bhd stopped funding its Indian subsidiary as the global drop in travel 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 confidential matter. .
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. AirAsia 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. Once the model for the region’s revolution in low-cost travel, the group is seeking up to 2.5 billion ringgit to overcome the crisis.
Meanwhile, the long-range arm AirAsia X Bhd 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.
Read also:
AirAsia’s troubles grow as India’s minister hints at local shutdown
Cessation of operations in Japan is positive long-term for AirAsia Group earnings – Maybank IB
AirAsia Japan ceases operations
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