PETALING JAYA,Nov 25: India’s Tata group will provide as much as US$50 million in emergency funding to keep its budget airline joint venture with AirAsia Bhd afloat, Hindustan Times reported, quoting two people aware of the matter.
The fund infusion, through a mix 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 had quoted the AirAsia group as saying last week 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-shuttered Japan business, had been draining cash and adding to the group’s financial stress.
“Cost containment and reducing cash burn remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India,” it said.
Hindustan Times said the cessation of AirAsia’s funding of the 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 remain invested in AirAsia India though it may seek out a suitable partner to invest in the airline in the future,” it quoted one of the two people as saying.
“The Tata group is looking beyond the pandemic when it comes to the aviation sector. It firmly believes that the domestic aviation market will come back strongly in the medium term and that there is clearly enough space in the market for a domestic LCC (low-cost carrier).”
It said a Tata group spokesman declined to comment, and a spokesman for AirAsia India did not respond to emailed queries.
The report said AirAsia India had slashed pilot salaries by an average of 40% in May and June.
It 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 planes.
According to Hindustan Times, the Tata group also owns a controlling stake in Vistara, the full-service airline joint venture with Singapore Airlines.