Tata Sons to buy Bhatia promoted Telstra's 7.94% stake in the low-cost carrier; Two Tata executives to acquire his remaining 2% stake
Tata Sons on Monday announced increasing its stake in AirAsia to 49% by buying Arun Bhatia controlled Telestra's 7.94% stake in a latest development at the controversy ridden airline.
The rest 2% of Bhatia's shares are being acquired by Tata Group executives and airline Board members S Ramadorai and R Venkataramanan.
dna was the first to report on the development on February 13.
The development will see Bhatia exiting the three-way joint venture between Tatas, Bhatia's Telstra and Tony Fernandes promoted AisAsia Malaysia, which will continue to hold 49% of share in the airline.
AirAsia, which has a reputation of disrupting the market it enters, began operations in India in June 2014.
Since the beginning the airline has been mired in controversies with rival airlines alleging its ownership contravened the existing civil aviation laws of the country.
Bhatia had openly claimed that Fernandes is remote-controlling the management of the airline, an allegation denied by the other partners. The airline also saw a slew of exits from the top-level of management, which further created chaos and put a question mark over the strategy of AirAsia in India. BJP leader Subramanian Swamy had earlier moved apex court claiming that AirAsia-Tata Sons deal to be illegal.
AirAsia India had earlier this month already announced Amar Abrol will succeed Mittu Chandilya as the CEO from April . The airline management had also announced the appointment of Ankur Khanna as the chief financial officer and Kiran Jain as the head of commercial.
In a statement, Tata Sons said it has entered into an agreement with Air Asia (India) Ltd and Telestra Tradeplace Pvt Ltd for the stake purchase. AirAsia India chairperson S Ramadorai and R Venkataramanan, in their individual capacity, proposed to acquire 0.5% and 1.5% shareholding respectively of Telestra's remaining 2% stake in the company.
AirAsia Investment Ltd will continue to hold its 49% stake in the company, it said. The agreement was entered into on March 14, and the transaction is proposed to be completed in April, 2016, subject to completion of the relevant corporate approvals and processes, it said.
AirAsia has operations based in Malaysia, Indonesia, Thailand, Philippines, India and Japan.
Commenting on the issue, Devesh Agarwal, a Bangalore-based aviation analyst said, " It's a welcome move and will allow the two main players to bring needed additional fund into the airline"
AirAsia can no longer proceed in slow manner in which it is operating at present and the management is now left with the option of either to expand in the India market or perish.
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