Tatas increase stake in AirAsia India

Tata Sons will increase its stake in budget carrier AirAsia India to 49%, effectively making it the biggest shareholder in two local airlines and underlining the group's long-term ambitions in the country's fast-growing aviation industry . The move should also help the carrier get moving on delayed expansion plans.
The salt-to-software conglomerate will buy a 7.49% stake from the airline's smallest shareholder Telestra Tradeplace, owned by Arun Bhatia, it said. AirAsia India chairman S Ramadorai and director R Venkataramanan will together buy Bhatia's remaining 2% holding, giving the latter an exit from the airline. The Tony Fernandes-founded and Malaysia-based AirAsia Bhd will retain its 49% stake. Tata Sons owns 51% of Vistara, its joint venture with Singapore Airlines, which owns the rest. Tata Sons didn't say how much the additional stake in AirAsia India will cost. Additional equity has been a key requirement for the airline which­ has been struggling for cash and lagging rivals.The airline that started in 2014 has just six planes, half of what it had targeted in the first year itself. It controls about 2% of the domestic passenger market.
Mark Martin, founder of Martin Consulting LLC, called the investment a “win-win“ for buyer and seller and said it will initiate a period of rapid expansion for AirAsia India. It plans to increase weekly capacity to 280 flights a week from 168.
The move will see the departure of a shareholder whose relationship with his partners appeared to have soured. Bhatia had accused the Malaysian parent of controlling the carrier in contravention of the law. He also blamed the carrier's disappointing performance on poor management and third-party agreements with companies affiliated to Fernandes. At the time, he had said he may move court or approach the authorities. Tata Sons has rejected accusations that AirAsia India is not under the effective control of the Indian management. Bhatia is a Delhi-based businessman whose son married ArcelorMittal CEO LN Mittal's daughter in 2004.
The Tata Sons investment comes as the aviation business is looking up, thanks to lower fuel prices and growing demand.
There have also been departures at the top of AirAsia India. Earlier this month, the airline announced the exit of CEO Mittu Chandilya and said Amar Abrol, chief of Tune Insurance, would replace him. Since it began operations, AirAsia India has lost or replaced about 10 top executives. The list includes chief financial officer Vijay Gopalan and commercial director Gaurav Rathore, apart from the heads of flight operations, operations control, HR, cabin crew, security , group operations and corporate quality .

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