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KUALA LUMPUR (Dec 9): India-based conglomerate Tata Group will stop payment of fees from AirAsia (India) Ltd to AirAsia Group Bhd if AirAsia Group does not provide funds to its low-cost airline (JV) joint venture sooner from December 31, 2020, Economic times (Y) reported, citing recently added clauses in AirAsia India’s shareholders agreement.
According to the Y Tuesday night’s report (December 8), Tata will also start deducting fees and offsetting them against AirAsia India shares if its JV partner AirAsia Group is unable to raise funds by subscribing to a rights offering of at least 300 crore rupees. (about RM166 million).
“The development highlights the tension that has arisen between business allies in recent times.
“AirAsia India, a 51:49 joint venture in which Tata is the majority shareholder, owes AirAsia Group Rs 489 crore according to their latest available financial statements.
“Now, Tata Group had injected 300 crore rupees into the budget airline (AirAsia India) in July to keep it flying amid the Covid-19 outbreak that resulted in a two-month ban on flying from March 24. new clauses were incorporated into the shareholders agreement at the time, people familiar with the matter said Y, ” Y reported.
AirAsia India is reported to owe money to AirAsia Group because of the money it raised from selling tickets on planes operated by other AirAsia Group companies.
According to the report, AirAsia India also uses the services of AirAsia Group companies for the maintenance of its aircraft and also purchases in-flight consumables and magazines from AirAsia Group.
“Some of those accounts payable could start to be converted into shares of the airline (AirAsia India) if AirAsia [India’s Malaysian] parent does not draw funds by year-end.
“Tata and AirAsia India declined to comment when contacted. AirAsia Group did not respond to inquiries as of press time on Tuesday,” Y reported.
According to the AirAsia Group website, AirAsia Group, through its 100% owned AirAsia Investment Ltd, has a 49% stake in AirAsia India.
In Bursa Malaysia today, AirAsia Group shares rose five sen or 5.68% to 93 sen at 10:47 am for a market capitalization of around RM3.11 billion. The stock saw around 126 million shares traded.
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