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KUALA LUMPUR: AirAsia Group Bhd
, which was severely affected by travel restrictions due to the Covid-19 pandemic, has shed a 32.67% stake in its operations in India.
In a statement to Bursa Malaysia, the low-cost carrier said on Tuesday that its AirAsia Investment Ltd (AAIL) unit sold its stake in AirAsia (India) Ltd (AAI) to Tata Sons Private Ltd, India for $ 37.66 million. or RM152.58 million. . This brings its stake in AAI to 16.33%.
AAG explained that the investment in AAI, an associated company, had been accounted for using the equity method whereby the original cost of the investment is adjusted for our share of profit or loss in subsequent years.
“The participation of losses over the years has resulted in the investment’s book value at the date of the transaction being zero.
“Therefore, the proposed provision will result in a gain on the disposal of US $ 37.66 thousand (RM152.58 thousand) in the fourth quarter of 2020 both at the AAIL and consolidated group level.
“AAIL’s net assets and cash balance will also increase by the same amount immediately after this cash draw exercise,” he said.
AAIL also agreed to waive unpaid brand license fees payable by AAI to AirAsia Bhd, a unit of the company, under the brand license and technical services agreement dated December 30, 2019 due to the Covid-19 pandemic.
AirAsia Group (airlines) President Bo Lingam said: “This transaction is in line with our initiatives to reduce cash utilization for the group and will allow us to use cash to increase market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines, as well as for our future expansion to Cambodia, Myanmar and Vietnam.
He said AirAsia Group has been reviewing its future business strategy regularly, including its investment in AAI.
“This transaction will ensure tight cost containment for AirAsia Group in the short term and will strengthen our presence in Asean as we continue our dominance of the market for travel from Asean to India and North Asia.
“India will continue to be an important market for AirAsia. Tata Sons Private Ltd has been an excellent partner and we look forward to continuing to work closely in other areas of growth. “
Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 30 Airbus A320 aircraft.
International services to India from Malaysia and Thailand will resume in the future after travel restrictions are lifted and borders with India are reopened.
AirAsia operates more than 100 weekly flights from Malaysia and Thailand to nine destinations in India.
AirAsia Group has transformed itself into a digital travel and lifestyle platform with airasia.com, as well as digital ventures in logistics, e-commerce, fintech and fast food chain, among others. AirAsia Group also operates a regional technology center in Bangalore, India
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