Tatas readying Air India's low-cost arm AIX Connect to expand flights

Authorised share capital doubled to Rs 10,000 cr; borrowing limit raised from Rs 2,800 cr to Rs 4,500 cr

The Tata Group is getting Air India's low-cost subsidiary AIX Connect financially ready in order to expand its flight operations. It has raised AIX Connect's authorised share capital from Rs 5,200 crore to Rs 10,000 crore and increased its borrowing limit from Rs 2,800 crore and Rs 4,500 crore.

Increasing the authorised share capital allows the owner to issue more shares in order to infuse more money into the company. The Tata Group is currently in the final stage of talks with Boeing and Airbus to place a "historic" aircraft order for Air India and its low-cost subsidiary.

AIX Connect, formerly known as AirAsia India Private Limited (AIPL), flies domestic only. It is in the process of being merged with Air India Express--which primarily operates flights to Gulf countries and has a miniscule domestic presence--to create a single low-cost subsidiary of Air India.

Aloke Singh, CEO, Air India Express, will head the single low-cost arm after the merger. He took charge as the CEO of AIX Connect from Sunil Bhaskaran on Sunday and subsequently told employees on email that "AIX Connect provides a platform for an international footprint, ready to scale up to a formidable pan-Asia network".

"A meaningful domestic presence with a new fleet is on the anvil. Cross feeds between the international long-haul, international short-haul, and domestic networks will give us an unmatched competitive advantage," he added.

The process of integrating AIX Connect with Air India Express is speeding up, Singh asserted. "Over 150 colleagues from both organisations are already working together on dozens of essential workstreams underpinning the integration exercise. My primary responsibility will be to work with the integration teams, and indeed everyone across the two organisations, to bring these initiatives to fruition," he mentioned.

Air India got complete control over AIPL on November 2 when it bought Malaysia-based AirAsia Group's remaining 16.67 per cent stake for Rs 155.64 crore.

On the next day itself, the Tata Group called an extraordinary general meeting of AIPL to raise its authorised share capital from Rs 5,200 crore (Rs 2,100 equity capital plus Rs 3,100 crore preference capital) to Rs 10,000 crore (Rs 6,900 crore equity, Rs 3,100 crore preference), according to documents reviewed by Business Standard.

"The company is looking to enhance its operations and, in this regard, it is necessary to increase the current authorised share capital to meet the funding requirements of the company," one of the AIPL documents stated.

On December 15, AIPL called another EGM in which it changed its name to AIX Connect Pvt Ltd. At this meeting, the board of directors approved increasing the company's borrowing limit from Rs 2,800 crore to Rs 4,500 crore.

The Tata Group and AIPL (now AIX Connect) did not respond to queries sent by Business Standard. AIX Connect currently operates 1,370 flights a week using its 28 planes.

Vistara, a 51:49 joint venture of the Tata group and Singapore Airlines, has already received Rs 650 crore from both the partners on November 16. Vistara is in the process of being merged into Air India. Singapore Airlines will hold a 25.1 per cent stake in the merged entity.