AirAsia India is said to have taken out short-term loans in the past 6 months to deal with cash shortages. The airline, which is in the process of merging with Air India Express, has never made a profit since it began operations in 2014, and the past two years have really taken a toll on its overall financial health.
Short term loan
AirAsia India airline has availed short-term loans in the last 6 months amounting to around $77 million. Business Standard says it has reviewed documents showing the airline has taken out loans three times in the past six months and also availed itself of an overdraft facility.
The airline is said to have taken out 3 short-term loans in the last 6 months. Photo: Airbus
The report said Standard Chartered Bank provided about $24.5 million in short-term loan and $3.6 million in overdraft facility last month, while IndusInd Bank provided $24.5 million to the airline in the form of a short-term loan in June. Tata Capital also provided a short-term loan of $24.5 million to AirAsia India in April this year.
So far, none of the financial institutions have made an official statement on this.
Still not profitable
AirAsia India was launched in 2014 as a joint venture between the Tata Group and AirAsia Investment Limited. The Tatas started with a 51% stake in the company, which was further increased to 83.67% in 2020.
The airline has had a tough few years due to the pandemic, with its loss rising 42% year-on-year to nearly $275 million. Its revenue rose nearly 39% to $238 million, but a 67% rise in aviation turbine fuel and a weakening Indian rupee against the US dollar impacted overall numbers.
Last year, AirAsia India posted an annual loss of $193 million, nearly double the previous year, and revenue of $171 million. It has scaled back operations and returned seven Airbus A320 aircraft to AirAsia Berhad, and currently has an active fleet of 26 A320s, per ch-aviation.
Merger
The airline’s proposed merger with Air India Express is reportedly being worked on and, if all goes well, could be completed in about a year. The hope is that a consolidated entity following the merger, along with the combined strength of both airlines’ fleet and network, will give it a significant boost in revenue over the years.
Air India Express will likely soon merge with AirAsia India. Photo: Getty Images
However, the Tatas will first have to deal with the accumulated loss to AirAsia India before that. It was previously reported that an audit report had “cast doubts” on AirAsia India as a “going concern” as its net worth was wiped out and its liabilities exceeded current assets.
It is speculated that the Tatas could write off the losses ahead of the planned merger, although there has been no confirmation on this.
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Source: Trade standard
