The holding company for Capital A’s airline business (formerly known as AirAsia Investment; a division of Malaysia’s AirAsia Group) announced to the stock exchanges on November 2 that it has sold its remaining interest in the airline’s India operations to Air India.
The company announced the sale of the remaining 16.33 percent of AirAsia’s equity shares to Air India Limited, a subsidiary of Tata Sons Private Limited, following the announcements made on December 29, 2020, and January 5, 2021, regarding the disposal of 32.67 percent equity shares in AAI with AAAGL receiving $37,660,000 in gross proceeds.
The company said in a statement: “All customary consents and regulatory approvals have been secured. AAAGL is expected to receive Rs 1,556,487,800 (equivalent to $18.83 million) in gross proceeds. There will be no gain or loss on the disposal as Capital A has marked the remaining 16.33% in AAI to its fair value.”
Notably, AAI has received certain notices from the Indian tax authorities during the course of the joint venture’s operations. The business has declared that it will work with AAI to contest these notices alongside its affiliates.
The disposal will also have no impact on the capitalization of Capital A shares and the ownership of major shareholders, and it is not anticipated to have a significant impact on the company’s earnings per share, net assets per share, or gearing for the fiscal year ending December 31, 2022.
Additionally, following this disposal process, the cash balance of AAAGL will rise by the same amount.
Following the transaction’s completion, AAAGL will have no equity stake in AAI, and the brand licence and technical services agreement between AirAsia Berhad and AAI will expire after 12 months from the date that the parties’ shareholders agreement was terminated, unless AAI notifies the parties of an earlier termination date.
The merged entity of Air India and AirAsia India will have a 15.7 percent share of the domestic passenger market in India, according to a previous report from Moneycontrol, and it is not anticipated to have an impact on the level of competition in the country’s aviation business.
Tata Sons acquired Air India on January 27 of this year through its fully owned subsidiary Talace in a deal worth Rs 18,000 crore in equity and debt.