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After AirAsia Japan bankruptcy, group reviews India’s unit

Malaysian low-cost airline AirAsia Group is revising investments in its financially burdened Indian subsidiary, after its Japan affiliate filed for bankruptcy on November 17, 2020. The revision prompted speculation that AirAsia Group might exit India.

AirAsia India,a joint venture between Tata Sons and AirAsia Investments, has been facing headwinds for quite some time, after the aviation sector has been severely hit by the outbreak of coronavirus pandemic.

In the statement published on November 17, 2020, AirAsia Group expressed their confidence in strong recovery. However, it also marked concerns about its business in India and Japan.  

The statement came in hours after the Japan unit filed for bankruptcy with the Tokyo District Court, saying that the investments in its Indian affiliate would be reviewed since its business had been “draining cash, causing the group much financial stress,” according to Bo Lingam, the president of airlines at AirAsia Group.

Lingam added that “cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India.”

Path to recovery

During the COVID-19 crisis, Air Asia‘s key flights were operated domestically. However, the airline has hopes for international flight recovery.

“Air travel is essential for the world’s economy and AirAsia is already seeing strong signs of recovery in our key domestic markets where there is much pent-up demand. AirAsia’s domestic services in Thailand, for example, are already at close to 100% of pre-COVID capacity levels and there are similar strong positive signs from across the AirAsia Group including in Malaysia, Indonesia and the Philippines, indicating that forward bookings for future travel are already on the rebound in our major markets,” explained Bo Lingam.

Recent positive COVID-19 vaccine trial developments also mark great news for the international flight recovery.

The airline indicated that “tourism hotspots like Thailand, Singapore, Australia, Korea, Indo-China and Taiwan are coping extremely well with the pandemic and they are very likely to reopen borders first“.

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