Picture: ISTOCK
Picture: ISTOCK

Singapore/Kuala Lumpur — AirAsia Group 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 plans for an initial public offering (IPO) and international expansion.

The case, also filed against CE 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 election period.

"The [India] investigations could be long-drawn and will derail AirAsia India’s plans to launch international flights from next year and defer its IPO targets too," said Corrine Png, CEO of transport research firm Crucial Perspective in Singapore.

India’s Central Bureau of Investigation 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 bureau 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 $2.5bn.

AirAsia shares closed down nearly 7%, while the broader Malaysian market was down more than 3%.

The sharp fall in the airline’s share price triggered a query from Malaysia’s stock exchange.

AirAsia denied all the accusations, which it called "baseless and motivated by considerations that as yet remain unknown", and said it would defend itself.

"Legal action to protect AirAsia and its interests against these allegations will be taken against any person who is known to have maliciously and frivolously instigated, and/or smeared the good reputation of individuals and shareholders of [AirAsia India]," the airline said in a statement to the exchange.