Tata Sons in talks to buy out AirAsia India stake at steep discount: Report

Tata Sons will likely tie up with other financial investors to acquire AirAsia's 49 per cent stake in the venture.
Tata Sons will likely tie up with other financial investors to acquire AirAsia's 49 per cent stake in the venture.PHOTO: REUTERS

BENGALURU (REUTERS) - Indian conglomerate Tata Sons is in talks to buy out AirAsia Group Bhd's stake in their airline joint venture in India at a steep discount, the Business Standard newspaper reported on Thursday (July 9), citing banking sources.

Tata Sons will likely tie up with other financial investors to acquire AirAsia's 49 per cent stake in the venture, according to the newspaper.

Tata Sons declined to comment. AirAsia did not immediately respond to a request for comment.

Malaysian budget carrier AirAsia said earlier on Thursday it was in talks to raise more than RM1 billion (S$327.4 million) in funds, a day after its auditor cast doubt on its ability to continue as a going concern.

AirAsia said it was considering various fund-raising options, including debt and equity, and looking to at least halve cash expenses this year.

"We have been presented with proposals in various forms of capital raising, be it debt or equity, and are in ongoing discussions with numerous parties, including investment banks, lenders, as well as interested investors in seeking a favourable outcome for the group," the airline said in a statement.

Some financial institutions have indicated they would support a funding request of over RM1 billion, it said.

A part of the funding would come from a Malaysian government guarantee loan programme, AirAsia said, adding its subsidiaries in the Philippines and Indonesia have also applied for loans.

Equities research firm CGS-CIMB said AirAsia would need RM3 billion in new funding to maintain a healthy cash position, adding capital-raising efforts could result in shareholder dilution.

 

AirAsia, like other airlines, has been slammed by the coronavirus pandemic that has hammered demand for air travel. The airline has begun to cut jobs and salaries to save costs, and is working on extensions with lessors, it said.

On Monday, the airline posted a first-quarter loss of RM803.8 million, its biggest quarterly loss since its 2004 listing.

AirAsia has also sought payment deferrals from suppliers and lenders, and halted all deliveries of Airbus SE jets this year.