MUMBAI: Regardless of Cyrus Mistry’s reservations, the Tata group is confident that its twin aviation bets — with Singapore Airlines (SIA) and Air Asia — are backed by sound business judgement despite losing money on them.
Tata SIA, which runs Vistara Airlines, lost nearly 58 paise for every rupee earned in sales in its first year of operations, reports The Economic Times.
The joint venture between Tata Sons and Singapore Airlines posted a net loss of Rs 401 crore on a revenue of Rs 691 crore for the year to March, as per filings with the Registrar of Companies. The Air Asia India joint venture posted a net loss of Rs 19.4 crore with revenue of Rs 180 crore in the quarter ended June, as per its investor presentation.
That’s not unusual early on in this business, said a Tata Group spokesperson. “Aviation is a long-gestation business sector, and it can take several years before profitability is achieved,” the spokesperson said. “Suffice it to say we have a clear road map for profitability in both companies.”
In his letter to the board last week, Mistry highlighted his concerns over aviation, saying he’d been overruled. “He (Ratan Tata) had concluded negotiations to partner with AirAsia (Bhd) and wanted the proposal tabled at the forthcoming Tata Sons board meeting. My pushback was hard but futile,” Mistry said in his letter on October 25, a day after being sacked as chairman of Tata Sons and replaced by Ratan Tata as interim chairman.