Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  BURSA MALAYSIA  >  Airasia Group BHD    AIRASIA   MYL5099OO006

AIRASIA GROUP BHD

(AIRASIA)
  Report  
SummaryNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

With Tata patriarch back as pilot, likely tailwind for airline ventures

share with twitter share with LinkedIn share with facebook
share via e-mail
0
10/28/2016 | 09:34am EST

NEW DELHI (Reuters) - As family patriarch Ratan Tata takes back the controls at his Indian conglomerate after a boardroom coup this week, one sector is cheering his, albeit interim, return: the group's airline ventures, both lagging competitors in India's cutthroat market.

Industry executives and analysts say they expect loss-making Vistara and AirAsia India, both part-owned by Tata, to enjoy fresh cash and expansion plans as low fuel prices and Indian government policy drive a boom in air travel.

"Now he's back, we'll see him taking aggressive steps," said Mark D Martin, chief executive at Martin Consulting, adding this could include growing other ventures such as Taj Air, a charter company also owned by the Tata group.

Vistara and AirAsia India declined to comment.

Tata Sons, the parent controlling Tata's listed businesses, has said Ratan Tata's return from retirement is temporary, and denied the move would mean any extra focus on the airlines - other than for business reasons. "Both businesses are completely focused on enhancing their market positions," a spokesman said.

But analysts say the move will have a longer-term impact, with the family reasserting its influence in day-to-day operations.

Tata agreed to invest an estimated $60 million into the two airlines when they launched, mostly into Vistara.

The two airlines have a combined India market share of around 5 percent - dwarfed by more established carriers like InterGlobe Aviation's (>> Interglobe Aviation Ltd) budget airline IndiGo.

AT ODDS

The Tata family has a long history with aviation.

Ratan Tata's predecessor was India's first qualified pilot, and Tata's first airline was later nationalised as state carrier Air India. Ratan Tata, insiders said, fulfilled a long-held dream when he pulled the group back into the aviation sector in 2013.

Ousted chairman Cyrus Mistry, who replaced Tata in 2012, was less keen, however.

In a leaked letter to the Tata board earlier this week, Mistry said he had opposed Tata's 2013 partnership with Malaysia's AirAsia Bhd (>> AirAsia Berhad) to launch AirAsia India.

More than a year later, Tata started a second airline, Vistara, in partnership with Singapore Airlines (>> Singapore Airlines Ltd.).

"Tata Sons took a considered view that it makes business sense to take part in India's civil aviation industry," a spokesman for Tata Sons said.

Mistry's blistering letter portrayed Ratan Tata, 78, as a man who cast aside his advice and bulldozed through major decisions. Mistry considered the airlines to be proof that he had his hands tied as chairman, illustrating just how Tata still pulled the strings even after retiring.

"It is on his advice that the Tata Sons board has increased the capital infusion in the (aviation) sector at multiple levels of the initial commitment," Mistry wrote.

Tata has not detailed its most recent capital infusion, but media reports have said it increased its stake in AirAsia India over time to 49 percent from 30 percent for an undisclosed sum.

In Vistara, 51 percent-owned by Tata, media reported last month Tata approved injecting an additional $37 million alongside Singapore Airlines, which would bring the total equity by the joint-owners to around $150 million.

EMOTIONAL TIES

Whoever's in charge, turning a profit in India's competitive environment will be tough. Analysts say two years is too short: budget airlines could take up to five years and full service carriers up to seven years to be profitable.

Vistara has already had to revise its strategy, which initially sought to target business travellers, and AirAsia India has seen several senior management changes since it launched in 2014, and experts have queried its strategy.

Airline analysts and consultants said they expect Tata to strengthen the group's market foothold, for example, by expanding its partnership with Metro Jets, a provider of business aviation services including charters and maintenance.

"For Ratan Tata, it's an emotional issue," said Harsh Vardhan, head of Starair Consulting. "The Tatas think they pioneered aviation in the country, and again have a role to play."

(Reporting by Aditi Shah and Tommy Wilkes; Editing by Clara Ferreira-Marques and Ian Geoghegan)

By Aditi Shah and Tommy Wilkes

Stocks mentioned in the article
ChangeLast1st jan.
AIRASIA GROUP BHD End-of-day quote.
INTERGLOBE AVIATION LIMITED 0.77% 1338.95 End-of-day quote.14.05%
JET AIRWAYS (INDIA) LIMITED -4.91% 18.4 End-of-day quote.-93.03%
SINGAPORE AIRLINES LIMITED -0.11% 8.96 End-of-day quote.-4.98%
SPICEJET LTD -1.23% 104.3 End-of-day quote.14.74%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on AIRASIA GROUP BHD
02:28aWATCH : Bacolod artist unmasks Masskara making tradition
AQ
12/06AIRASIA BHD : Low-cost airline Air Asia, UMG partner up to launch Asia-focused r..
AQ
11/28CATHAY PACIFIC AIRWAYS : Hong Kong to allow airlines to keep airport slots despi..
RE
11/27EXPEDIA : Malaysia's AirAsia swings to net loss as FX fluctuations bite
RE
11/25AIRASIA BHD : No timeline for AirAsia's IPO Fernandes
AQ
11/22AIRASIA BHD : boosts fleet with A321neo
AQ
11/18Asian airlines slash flights to Hong Kong as unrest escalates
RE
11/18Asian airlines slash flights to Hong Kong as unrest escalates
RE
11/16AIRASIA BHD : adds more flights to top domestic routes
AQ
11/11AIRASIA BHD : Welcome to RedPoint
AQ
More news
Financials (MYR)
Sales 2019 11 991 M
EBIT 2019 791 M
Net income 2019 375 M
Debt 2019 2 173 M
Yield 2019 55,5%
P/E ratio 2019 14,9x
P/E ratio 2020 9,65x
EV / Sales2019 0,64x
EV / Sales2020 0,60x
Capitalization 5 548 M
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 21
Average target price 1,76  MYR
Last Close Price 1,66  MYR
Spread / Highest target 32,5%
Spread / Average Target 6,28%
Spread / Lowest Target -15,7%
EPS Revisions
Managers
NameTitle
Anthony Francis Fernandes Group CEO & Non-Independent Executive Director
Kamarudin bin Meranun Non-Independent Executive Chairman
Adrian Jenkins Chief Operating Officer
Pattra Boosarawongse Group Chief Financial Officer
Kin Choy Lau Group Head-Information & Communication Technology
Sector and Competitors
1st jan.Capitalization (M$)
AIRASIA GROUP BHD1 334
DELTA AIR LINES INC.11.28%35 780
UNITED AIRLINES HOLDINGS, INC.3.32%21 891
RYANAIR HOLDINGS30.23%16 997
AIR CHINA LIMITED5.45%16 212
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, SA-11.59%14 287