Tata Sons will likely have to write off Rs 2,600 crore in the form of accumulated losses for AirAsia India, which Tata Group-owned Air India has proposed to fully acquire and merge with Air India Express, reported The Economic Times on Wednesday.
No decision has been taken on whether the write-off will be included in the balance sheet of Tata Sons or Air India, ET reported, citing officials aware of the development.
An auditor’s report, casting doubts on AirAsia India as a “going concern,” stated that the airline’s net worth has been fully eroded and its liabilities exceed current assets, reported ET.
Already reeling under losses, AirAsia India was badly affected by the Covid-19 pandemic, officials told ET.
Air India, earlier this year, offered to buy the entire equity share capital of AirAsia India, in which Tata Sons has an 83.67 per cent stake. Air India has sought the approval of the Competition Commission of India for the same.
AirAsia India’s remaining 16.33 per cent stake is currently owned by AirAsia Investment Ltd, part of Malaysia’s AirAsia Group.
Autos-to-steel conglomerate Tata bought state-run carrier Air India in a $2.4 billion equity and debt deal earlier this year, regaining ownership of what used to be India’s flagship carrier, after nearly 70 years.
The deal included three entities – full-service carrier Air India, its low-cost arm Air India Express, and AI SATS, which provides ground-handling and cargo services.