Malaysia's flagship budget carrier AirAsia Berhad will reduce its stake AirAsia India, its joint venture with Tata Group. In a regulatory filing on Tuesday, AirAsia Group said it will sell 32.67 per cent of its equity shares in AirAsia India Limited (AAI) held by the group's wholly-owned subsidiary, AirAsia Investment Limited (AAIL), to Tata Group for $37.7 million. Post stake sale, its shareholding in AAI will reduce to 16.33 per cent, while Tata Group's stake will rise to 83.67 per cent.
AirAsia India is a joint venture with Tata Sons currently holding 51 per cent stake in the airline and AirAsia Investment Limited (Malaysia) holding the remaining 49 per cent stake.
Commenting on the development, President (Airlines) of AirAsia Group, Bo Lingam said, "This transaction is in line with our initiatives towards reducing cash utilisation for the Group and will allow us to use cash to grow market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam.
"AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI. This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in Asean while continuing our market dominance for travel from Asean to India and North Asia," Lingam said.
"India will remain an important market for AirAsia. TSL has been an excellent partner and we look forward to continue working closely together in other areas of growth," he added.
AirAsia India commenced operations on 12 June 2014 in India with Bengaluru as its primary hub. Currently, it flies to 19 domestic destinations across India with 30 Airbus A320 aircraft and commands a 7.1 per cent share of the domestic civil aviation market.
Meanwhile, 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 over 100 weekly flights from Malaysia and Thailand to nine destinations in India.
AirAsia Group has transformed 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 centre in Bengaluru, India.