KUALA LUMPUR: AirAsia Group Bhd, which was badly affected by the travel curbs due to the Covid-19 pandemic, has disposed of a 32.67% stake in its Indian operations.
In a statement to Bursa Malaysia, the low-cost carrier said on Tuesday its unit AirAsia Investment Ltd (AAIL) sold its stake in AirAsia (India) Ltd (AAI) to Tata Sons Private Ltd, India for US$37.66mil or RM152.58mil. This brings its shareholding in AAI to 16.33%.
AAG explained the investment in AAI, an associate company, had been accounted using the equity method under which the original cost of the investment is adjusted for our share of profit or loss in subsequent years.
“The share of losses over the years have resulted in the carrying value of the investment at the date of transaction to be nil.
“The proposed disposal will therefore result in a gain on disposal of US$37.66mil (RM152.58mil) in the fourth quarter of 2020 at both AAIL and consolidated group level.
“The net assets and cash balance of AAIL will also increase by the same amount immediately after this cash disposal exercise, ” it said.
AAIL has also agreed to waive off unpaid brand license fees payable by AAI to AirAsia Bhd, a unit of the company, under the brand licence and technical services agreement dated Dec 30,2019 due to the Covid-19 pandemic.
AirAsia Group president (airlines), Bo Lingam said: “This transaction is in line with our initiatives towards reducing cash utilisation for the group and will allow us to use cash to grow market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam.
He said AirAsia Group has been reviewing its forward business strategy regularly, including its investment in AAI.
“This transaction will ensure strict cost containment for AirAsia Group in the short term, and strengthen our presence in Asean while continuing our market dominance for travel from Asean to India and North Asia.
“India will remain an important market for AirAsia. Tata Sons Private Ltd has been an excellent partner and we look forward to continue working closely together in other areas of growth.”
Headquartered in Bengaluru, AAI flies to 19 domestic destinations across India with 30 Airbus A320 aircraft.
International services to India from Malaysia and Thailand will resume in the future after travel restrictions are lifted and borders with India are reopened.
AirAsia operates over 100 weekly flights from Malaysia and Thailand to nine destinations in India.
AirAsia Group has transformed into a digital travel and lifestyle platform with airasia.com as well as digital ventures in logistics, e-commerce, fintech and fast-food chain, among others. AirAsia Group also operates a regional technology centre in Bengaluru, India
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