Promoters to invest Rs 234 cr in AirAsia India business

Airline earlier approved issue of fresh shares valuing Rs 234 cr to its two main owners, Tata Sons & AirAsia Malaysia, on a rights basis

The promoters of AirAsia India will infuse Rs 234 crore in the airline as it plans to grow its domestic footprint and prepares for foreign flights.

On June 14, the airline’s board approved the issue of fresh shares valuing Rs 234 crore to its two main owners — Tata Sons and AirAsia Malaysia — on a rights basis, company filings with the corporate affairs ministry show.

A day later, the Union Cabinet approved the civil aviation policy amending the controversial 5/20 norm on foreign operations by Indian carriers. AirAsia will benefit from the amendment as it does not have to wait for five years to launch foreign flight.

The fresh fund infusion is yet to take place and is subject to the board increasing the authorised share capital of the company to Rs 550 crore and receipt of other approvals.

Authorised share capital indicates the maximum amount a company can raise through the issue of shares.

AirAsia India did not respond to a query on the topic.

AirAsia India has six Airbus A320 aircraft at present and the management hopes to increase its fleet to 10 by 2016-end and 20 by 2017-end. It has a market share of 2.2 per cent and operates 40 daily flights from its bases in Bengaluru and Delhi.

AirAsia India is co-owned by Tata Sons (49 per cent) and AirAsia Malaysia (49 per cent). The remaining two per cent is held by Tata group veterans and airline's board members S Ramadorai and R Venkataramanan.

On Thursday, AirAsia group chief executive Tony Fernandes told PTI that he was willing to buy stake from the Tatas in AirAsia India, provided it is on sale, even as he emphasised that the airline joint venture was working well.

The airline began operations in June 2014, but its growth has been marred by losses, infighting among the promoters and high-level attrition. In March, Tata Sons increased their stake to 49 per cent buying out shares from Arun Bhatia of Telestra Tradeplace, who was the third investor in the airline. The owners have so far invested $30 million in the airline.

“We are excited about India. It is a tough market. We are looking to accelerate (in India),” AirAsia's group chief executive officer Tony Fernandes had said earlier in the week at Farnborough, England where AirAsia announced a deal to acquire 100 Airbus A321neo planes.  

The airline narrowed its loss to Rs 7.86 crore in the March-end quarter from Rs 31 crore in the same period last year thanks increase in revenue and lower fuel costs.