AirAsia shares plummet as probe threatens plans for India unit’s IPO

Thursday, 31 May 2018 00:00 - - {{hitsCtrl.values.hits}}

Singapore/Kuala Lumpur (Reuters): AirAsia Group Bhd shares plunged on Wednesday after federal police in India filed a case against the airline accusing it of corruption - a probe that threatens to delay its India unit’s IPO plans and international expansion.

The case, also filed against Chief Executive Tony Fernandes and unit AirAsia India, is a fresh blow to the airline’s embattled leader, who has been under fire for supporting Malaysia’s former prime minister and is being investigated over the cancellation of flights during the general election period.

“The (India) investigations could be long-drawn and will de-rail AirAsia India’s plans to launch international flights from next year and defer its IPO targets too,” said Corrine Png, CEO of Singapore-based transport research firm Crucial Perspective.

India’s Central Bureau of Investigation (CBI) accused the airline, some of its employees and third parties of violating foreign direct investment rules while obtaining its licence to fly, and of bribing government officials in an attempt to get regulations relaxed to allow AirAsia India to fly international routes.

The CBI said it had searched five AirAsia locations in Delhi, Mumbai and Bangalore, seizing certain documents.

Shares in Asia’s biggest budget airline slid as much as 10.6% to a one-year low on Wednesday. Since the Malaysian general election on May 9, they have shed about 20%, giving AirAsia a market value of roughly $2.5 billion.

By 0806 GMT, AirAsia shares were down about 8%, while the broader Malaysian market was down nearly 3%.

AirAsia India, a venture with India’s Tata Sons conglomerate, said in a statement on Tuesday it refuted any allegations of wrongdoing and was co-operating with all regulators and agencies “to present the correct facts”.

AirAsia on Wednesday referred requests for comment to AirAsia India.