Tatas to hike stake in JV airline AirAsia India to 49%

NEW DELHI: The Tata Group will increase its stake in the JV airline AirAsia India (AAIPL) from 41.06% to 49% by acquiring 7.94% stake of Telestra Tradeplace Airline chairman S Ramadorai and director R Venkataramanan will, in their individual capacity, acquire 0.5% and 1.5% of the remaining 2% stake of Telestra.
AAIPL was launched in 2014 with an original holding pattern of: AirAsia Bhd at 49%, Tatas at 30% and Arun Bhatia of Telestra Tradeplace at 21%.Last August, Tata Group hiked its stake to 41% and AirAsia remained at 49%, brining Telestra to 10%.
Bhatia was unhappy in this JV for several months for two reasons: the alleged running of this airline by the Malaysian partner and its continued loss-making run. TOI had first reported in May 2015 that Bhatia was eying to dilute his stake holding in AirAsia India Pvt Ltd (AAIPL). With the deal announced by Tata Group on Monday, Bhatia has exited the airline.
"Tata Sons has entered into an agreement with Air Asia (India), Telestra Tradeplace Pvt Ltd and two of the directors of the Company, being S Ramadorai (Chairman) and R Venkataramanan, under which Tata Sons proposes to increase its stake in the Company to 49% from its existing stake of 41.06%, by acquiring 7.94% equity stake from Telestra. S Ramadorai and R Venkataramanan, in their individual capacity, propose to acquire 0.5% and 1.5% shareholding respectively of Telestra’s remaining 2% equity stake in the Company. AirAsia Investment Ltd. will continue to hold its 49% stake in the Company. The agreement was entered into on March 14, 2016, and the transaction is proposed to be completed in April, 2016, subject to completion of the relevant corporate approvals and processes," a statement issued by the Tata Sons said.
The rejig comes just ahead of management level changes in the airline. Amar Abrol will be the next CEO as the incumbent Mittu Chandilya has chosen not to renew his three-year contract due to the Malaysian low cost carrier reportedly completely running this JV airline.
Chandilya, along with Arun Bhatia had in the past complained that this Tata-AirAsia JV is totally dominated by the Malaysian partner. Now both Chandilya and Bhatia will cease to be associated with this airline. Bhatia had even threatened to take the company to court on the issue of effective control being with the foreign partner.