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Air Asia sells remaining 16.33% stake in India operations to Air India
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  • Air Asia sells remaining 16.33% stake in India operations to Air India

Air Asia sells remaining 16.33% stake in India operations to Air India

Moneycontrol.com • November 3, 2022, 08:57:03 IST
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This means Air India has signed agreements to complete the acquisition of 100 percent shareholding in Air Asia India (AAI) and to subsidiarize it under Air India

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Air Asia sells remaining 16.33% stake in India operations to Air India

AirAsia Aviation Group Limited, the holding company of Capital A’s airline group (formerly known as AirAsia Investment – part of Malaysia’s AirAsia Group) informed the bourses on 2 November that it has sold its remaining stake in the India operations of the airline to Air India. This means Air India has signed agreements to complete the acquisition of 100 percent shareholding in Air Asia India (AAI) and to subsidiarize it under Air India. Following the announcements made on 29 December, 2020, and 5 January, 2021, on the disposal of 32.67 percent equity shares in AAI with AAAGL receiving $37,660,000 in gross proceeds, the company announced the disposal of the remaining 16.33 percent equity shares in AirAsia to Air India Limited, an affiliate of Tata Sons Private Limited. The company said in a statement: “All customary consents and regulatory approvals have been secured. AAAGL is expected to receive Rs 1,556,487,800 (equivalent to $18.83 million) in gross proceeds. There will be no gain or loss on the disposal as Capital A has marked the remaining 16.33% in AAI to its fair value.” Notably, during the course of the operations of the joint venture, AAI had received certain notices from the tax authorities in India. The company has said that it will, along with its affiliates, continue to cooperate with AAI in contesting these notices. Further, the disposal will not have any effect on Capital A share capital and substantial shareholders’ shareholding, and is not expected to have any material effect on the earnings per share, net assets per share as well as the gearing in the company for the financial year ending 31 December, 2022. Also, the cash balance of AAAGL will increase by the same amount after this disposal exercise. After the transaction closes, AAAGL will not hold any equity interest in AAI and the brand license and technical services agreement between AirAsia Berhad and AAI will be terminated after 12 months from the date of termination of the shareholders agreement between the parties or at an earlier date as may be intimated by AAI. Air India has informed that an operational review process is underway with a view to ultimately integrating AAI fully with Air India Express (AIXL). “Consolidation of these two airlines, both of which operate as low-cost carriers, will be undertaken as part of the restructuring roadmap that is being envisioned for the Tata group’s airline business and is expected to bring customer, revenue, cost and operational benefits through broader adoption of each airlines’ best practices, systems and routes, and the combined entity’s greater scale,” the carrier said in a release. A working group has been formed to evaluate and execute the integration of the AI Group’s low-cost operations, which will be co-led by Sunil Bhaskaran, CEO and MD, Air Asia India and Aloke Singh, CEO, Air India Express. The working group will report to a committee chaired by Air India MD & CEO, Campbell Wilson. The assessment and implementation of full integration process of AAI and AIXL, through a possible scheme of merger or otherwise and subject to necessary corporate approvals, is expected to take approximately 12 months, with network and other synergies to be realised progressively during that period. Commenting on the development, Wilson, said: “We are excited to initiate the creation of a single Air India Group low-cost carrier. This is a key step in the rationalisation and transformation of the Group, and we will be working closely with the management teams and staff throughout the process. We also look forward to the many new opportunities a stronger AI Group low-cost carrier will bring for customers and staff alike.” Notably, on 27 January of this year, Tata Sons purchased Air India through its wholly-owned subsidiary Talace in a deal of Rs 18,000 crore in equity and debt. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.

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