Tata group to inject up to $ 50 million into AirAsia India, report says

PETALING JAYA: India’s Tata group will provide up to $ 50 million in emergency funding to keep its low-cost airline joint venture with AirAsia Bhd afloat, the Hindustan Times reported, citing two people familiar with the matter.

The injection of funds, through a combination of debt and equity, could see the Tata group’s stake in AirAsia India Ltd grow beyond the current 51%, the duo said on condition of anonymity.

Reuters quoted the AirAsia group as saying last week that it was reviewing its investment in the joint venture airline.

The group had said in a statement that its operations in India, like those of its now-closed business in Japan, had depleted cash and added to the group’s financial stress.

“Cost containment and reducing cash outlays remain key priorities evident from the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” he said.

The Hindustan Times said that AirAsia’s cessation of funding for Indian operations had left AirAsia India dependent on the Tata group to fund the cash burn suffered during the Covid-19 pandemic.

“The Tata group will continue to invest in AirAsia India, although it may look for a suitable partner to invest in the airline in the future,” he quoted one of the two people.

“The Tata group is looking beyond the pandemic when it comes to the aviation sector. He strongly believes that the domestic aviation market will recover strongly in the medium term and that there is clearly enough space in the market for a domestic LCC (low cost airline). “

He said a spokesperson for the Tata group declined to comment and an AirAsia India spokesperson did not respond to emailed inquiries.

The report said AirAsia India had cut pilot salaries by an average of 40% in May and June.

He said the airline completed six years of operations in June and has about 2,500 employees, including 600 pilots for its fleet of 30 Airbus A320 jets.

According to the Hindustan Times, the Tata group also owns a majority stake in Vistara, the full-service airline joint venture with Singapore Airlines.